The official end of summer seems to have signaled a resurgence in refinancing.  Despite a week shortened by the Labor Day holiday, applications for refinancing jumped 12 percent during the week ended September 7 according to the Mortgage Bankers Association's (MBA) Weekly Mortgage Survey.  Applications for refinancing made up 80 percent of applications received during the week compared to 79 percent the previous week.

MBA cautioned that some lenders who originate largely through the Internet saw little if any decline in applications during the week when compared with lenders who rely on originations through retail offices that closed for the holiday.  The Association speculates that the customary adjustment to reflect the shorter work week might have overstated the level of refinancing as consumers may have used the extra leisure time to complete mortgage applications.

The Market Composite Index, a measure of application volume jumped 11.1 percent on a seasonally adjusted basis and with an adjustment for the holiday and rose 12 percent on an unadjusted basis compared with the week ended September 1.  The seasonally adjusted Purchase Index was up 8 percent from the previous week; the unadjusted Purchase Index rose 7 percent but was still down 15 percent from the same week in 2011.

Purchase Index vs 30 Yr Fixed

Refinance Index vs 30 Yr Fixed

Contract interest rates decreased across the board during the week and effective rates decreased for all loans except the 5/1 adjustable rate mortgage (ARM).  The average contract rate for 30-year fixed rate mortgages (FRM) with conforming loan balances ($417,500 or less) decreased to 3.75 percent from 3.78 percent with points increasing to 0.44 from 0.37.  The rate for the jumbo 30-year FRM (balances above $417.500) decreased to 4.0 percent with 0.30 point from 4.05 percent with 0.30 point.

FHA-backed 30-year FRM had an average rate of 3.50 percent with 0.43 point, down from 3.54 percent with 0.44 point.  This is a new low in the history of the MBA survey.

The rate for 15-year FRM decreased to 3.07 percent from 3.10 percent with points increasing to 0.38 from 0.37.

The contract rate for 5/1 ARMS decreased by 1 basis point to 2.63 percent, a new low in survey history, an increase in points from 0.35 to 0.47 drove the effective rate higher than during the previous week.  The ARM share of applications for the week decreased to 4.5 percent.

All interest rate figures are for loans with 80 percent loan to value ratios and points include the application fee.

MBA's survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990.  Respondents include mortgage bankers, commercial banks and thrifts.  Base period and value for all indexes is March 16, 1990=100.