Refinances Continue to Lift Application Volume

Mortgage application volume rose again last week as refinances continued to regain the ground they lost over the summer.

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The ""Mortgage Bankers Association's"":http://mba.org/ (MBA) Market Composite Index increased 0.3 percent on a seasonally adjusted basis for the week ending October 11. On an unadjusted basis, the index was up 0.4 percent.

MBA's Refinance Index rose 3 percent week-over-week, with the refinance share of total mortgage activity rising 2 percentage points to 66 percent.

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The Purchase Index also continued its downward trend, falling 5 percent both adjusted and unadjusted. The unadjusted Purchase Index was down 1 percent compared to the same week last year.

The decline in purchase application volume came largely as a result of the current political climate, said Mike Fratantoni, MBA's VP of research and economics.

""The government shutdown had a notable impact on the mortgage market last week. Purchase applications for government programs dropped by more than 7 percent over the week to their lowest level since December 2007, and the government share of purchase applications dropped to its lowest level in almost three years,"" Fratantoni said. ""Conventional purchase applications dropped as well, but not to the same extend, falling almost 4 percent for the week.""

Meanwhile, mortgage interest rates bounced following the prior week's decline. The average contract interest rate for a 30-year fixed-rate mortgage increased to 4.46 percent from 4.42 percent, with points falling to 0.31 from 0.44 (including the origination fee) for 80 percent loan-to-value loans.