Mortgage applications surged in the latest weekly index, led by a spike in refinancing activity, according to the Mortgage Bankers Association [1] (MBA).
The group's Weekly Mortgage Applications Survey [2] shows mortgage application volumes jumped 11.6 percent for the week ending October 17. The results include adjustments for seasonal influences but none for the Columbus Day holiday.
Unadjusted, the weekly increase was slightly greater at 12 percent.
The surge in the headline index stemmed from a substantial jump in the refinance application component, which was up 23 percent week-over-week to hit its highest level since November 2013. With that increase, the refinance share of mortgage activity climbed 6 percentage points to 65 percent, its highest so far this year.
While refinance volumes remain well below the boom levels seen in recent years, that segment has seen a minor resurgence as mortgage rates have descended to their lowest points in more than a year. According to MBA, the average contract interest rate for a 30-year fixed-rate mortgage was 4.10 percent last week, down a full tenth of a percentage point.
"Continuing concerns about weak economic growth in Europe and a few US economic indicators that came in below expectations cause a slight to quality into US Treasuries last week, leading to sharp drops in interest rates," explained Mike Fratantoni, chief economist for MBA.
On the other side, the market for home purchase loans showed less encouraging trends, with applications slipping 5 percent (both adjusted and unadjusted) and falling 9 percent short of last year.
Applications for government-insured mortgages were mixed. According to MBA, the share of applications for loans insured by the Federal Housing Administration (FHA) fell to 8.3 percent of all loans, down more than a percentage point. Meanwhile, the share of applications for Veterans Affairs loans climbed to 9.6 percent, while applications for USDA loans slipped to 0.8 percent.