Mortgage applications displayed their worst volumes in months during the week ended September 5.  That the week was shortened by the Labor Day holiday accounted for some of the bright red results, but even after adjustments to account for the holiday the application numbers were way down.

The Mortgage Bankers Association said that its Market Composite Index, a measure of mortgage application volume, was down 7.2 percent on a seasonally adjusted basis to the lowest level since December 2000.  It was also the largest one week drop in the index since the week ended June 13.  On an unadjusted basis the Composite lost 17 percent compared to the week ended August 29.

The Refinance Index decreased by 11 percent from the previous week, also the largest drop in a single week since June 13 and falling to the lowest level since November 2008.  The share of refinance applications fell back to 55 percent from 57 percent.

Purchase Index vs 30 Yr Fixed

The seasonally adjusted Purchase Index was down 3 percent from one week earlier, reaching the lowest level since last February.  The unadjusted Purchase Index was 14 percent lower week-over-week and was down 12 percent from the same week in 2013.

Refinance Index vs 30 Yr Fixed

With the exception of the benchmark 30-year fixed-rate conforming mortgage (FRM) both average contract and effective rates decreased during the week.  The rate for the 30-year FRM with conforming balances of $417,000 or less increased for the first time in four weeks, rising from 4.25 percent with 0.24 point to 4.27 percent with 0.25 point.  The effective rate also increased.

Jumbo 30-year FRM (balances greater than $417,000) fell from 4.22 percent to 4.15 percent.  Points increased to 0.23 from 0.29 and the effective rate decreased from the previous week.

The 30-year FRM guaranteed by the Federal Housing Administration (FHA) had an average rate 2 basis points below that of the previous week at 3.97 percent with points increasing to 0.08 from 003.  The effective rate decreased.

The rate for a 15-year FRM decreased to 3.44 percent with 0.28 point from 3.48 percent and 0.30 point.  The effective rate was also down.  

The share of applications for adjustable rate mortgages (ARMs) decreased from 7.8 percent of all applications to 7.5 percent.  The average contract interest rate for 5/1 ARMs decreased to 3.12 percent from 3.19 percent, with points remaining unchanged at 0.45 and the effective rate decreased. 

The MBA's data is derived from its Weekly Mortgage Application Survey which it has conducted since 1990.  The survey covers 75 percent of the retail mortgage market and respondents include mortgage bankers, commercial banks, and thrifts.  Base period and value for all volume indexes is March 16, 1990=100 and interest rate quotes are based on loans with an 80 percent loan to value ratio.  Points include the origination fee.