Purchase mortgage application volume rises along with rates

Mortgage applications increased slightly from one week earlier even as rates reached their highest level since July, according to the Mortgage Bankers Association.

The MBA's Weekly Mortgage Applications Survey for the week ending Oct. 25 found that the refinance index decreased 1% from the previous week and was 134% higher than the same week one year ago. The refinance share of mortgage activity decreased to 58% of total applications from 58.5% the previous week.

Meanwhile, the seasonally adjusted purchase index increased 2% from one week earlier and the unadjusted purchase index increased 2% compared with the previous week and was 10% higher than the same week one year ago.

"The 10-year Treasury rate rose slightly last week, as markets expected more progress toward a trade deal between the U.S. and China. Mortgage rates increased for the second straight week as a result, with the 30-year fixed rate climbing to 4.05%, the highest level since the end of July," Joel Kan, the MBA's associate vice president of economic and industry forecasting, said in a press release.

"Mortgage applications were mostly unchanged, with purchase activity rising 2% and refinances decreasing less than 1%. Purchase applications continued to run at a stronger pace than last year, finishing a robust 10% higher than a year ago. Considering how much lower rates are compared to the end of 2018, purchase applications should continue showing solid year-over-year gains."

Adjustable-rate mortgage share activity increased to 5.2% from 4.8% of total applications and the share of Federal Housing Administration-insured loan applications decreased to 12% from 12.1% the week prior.

The share of applications for Veterans Affairs-guaranteed loans decreased to 11.8% from 13.5% and the U.S. Department of Agriculture/Rural Development share increased to 0.6% from 0.5% the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) increased 3 basis to 4.05%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350), the average contract rate increased 5 basis points to 4.01%.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased 4 basis points to 3.83%. For 15-year fixed-rate mortgages, the average increased 1 basis point to 3.4%. The average contract interest rate for 5/1 ARMs increased to 3.43% from 3.29%.