Mortgage application activity rises on uptick in refinance volume

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An increase in refinance activity in the period after Columbus Day drove mortgage applications 4.9% higher from one week earlier, according to the Mortgage Bankers Association.

The MBA's Weekly Mortgage Applications Survey for the week ending Oct. 19 found that the refinance index increased 10% from the previous week. The previous week's results did not include an adjustment for Columbus Day.

"Mortgage application activity rebounded the week following the Columbus Day holiday, but both purchase and refinance levels remained lower than where they were two weeks ago," Joel Kan, the MBA's associate vice president of industry surveys and forecasts, said in a press release. "The holiday impacted refinance applications more than purchases, as refinances rebounded."

The seasonally adjusted purchase index increased 2% from one week earlier, while the unadjusted purchase index increased 2% compared with the previous week and was 0.2% higher than the same week one year ago.

Purchase applications "were still 4% lower than two weeks ago — a sign that both the jump in mortgage rates and tight inventory continue to hold back application activity. Mortgage rates increased over the week for most loan types, with most rates remaining at seven-year highs," Kan said.

The refinance share of mortgage activity increased to 39.8% of total applications from 38.1% the previous week.

Adjustable-rate loan activity decreased to 7% from 7.1% of total applications, while the share of Federal Housing Administration-guaranteed loans decreased to 10.1% from 10.4% the week prior.

The share of applications for Veterans Affairs-guaranteed loans decreased to 10.1% from 10.4% and the U.S. Department of Agriculture/Rural Development share decreased to 0.7% from 0.8% the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased to its highest level since February 2011, 5.11%, from 5.1%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100), the average contract rate increased 3 basis points to 5.01%.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased 8 basis points to 5.07%. For 15-year fixed-rate mortgages the average remained unchanged at 4.5%.

The average contract interest rate for 5/1 ARMs increased to its highest level since the series began in 2011, 4.47%, from 4.34%.