Mortgage applications decreased 4.8% from one week earlier, as refinance activity was down even as average rates fell to a new record low, according to the Mortgage Bankers Association.
"Mortgage rates decreased last week, with the 30-year fixed-rate mortgage declining 5 basis points to 3.05% — the lowest in MBA's survey," Joel Kan, the MBA's associate vice president of economic and industry forecasting, said in a press release. "There are indications that refinance rates are not decreasing to the same extent as rates for home purchase loans, and that could explain last week's decline in refinances. Many lenders are still operating at full capacity and working through operational challenges, ultimately limiting the number of applications they are able to accept."
The MBA's Weekly Mortgage Applications Survey for the week ending Sept. 25 found that the refinance index decreased 7%
The refinance share of mortgage activity decreased to 63.3% of total applications from 64.3% the previous week.
The seasonally adjusted purchase index decreased 2% from one week earlier, while the unadjusted purchase index decreased 2% compared with the previous week and was 22% higher than the same week one year ago.
"Purchase applications also decreased last week, but activity was still at a strong year-over-year growth rate. Even as pent-up demand from earlier in the year wanes, there continues to be action in the higher price tiers, with the average loan balance remaining close to an all-time survey high," Kan added.
Adjustable-rate mortgage activity remained unchanged at 2.2% of total applications, while the share of Federal Housing Administration-insured loan applications increased to 11.4% from 10.1% the week prior.
The share of applications for Veterans Affairs-guaranteed loans decreased to 11.9% from 12% and the U.S. Department of Agriculture/Rural Development share decreased to 0.5% from 0.6% the week prior.
The average contract interest rate for 30-year FRMs with conforming loan balances ($510,400 or less) decreased 5 basis points to 3.05%. For 30-year jumbo FRMs (loan balances greater than $510,400), the average contract rate decreased 2 basis points to 3.33%.
Meanwhile, the average contract interest rate for 30-year FRMs backed by the FHA decreased 8 basis points to 3.15%. However, the average contract rate for 15-year FRMs bucked the trend, increasing 1 basis point to 2.65%. The average contract interest rate for 5/1 ARMs decreased to 2.95% from 3.19%.
