The Mortgage Bankers Association's (MBA's) Market Composite Index, a measure of mortgage loan application volume, fell 4.3 percent on a seasonally adjusted basis during the week ended September 30.  Unadjusted, the Index was down 4.5 percent from the week ended September 23.

The Refinance Index and the seasonally adjusted Purchase Index fell by 5.2 percent and 0.8 percent respectively.  On an unadjusted basis the Purchase Index was down 1.7 percent week-over-week and was 12.1 percent lower than during the same week in 2010.

Four week moving averages rose 2.44 percent for the seasonally adjusted Market Index and 3.24 percent for the Refinance Index.  The moving average for the seasonally adjusted Purchase Index lost 0.33 percent. 

Refinancing as a share of all applications decreased 6 basis points to 79.1 percent and the adjustable rate mortgage (ARM) share ticked up from 6.1 percent to 6.4 percent.

Looking back at monthly figures for August, MBA reported that 50.7 percent of borrowers who were refinancing applied for 30-year fixed-rate mortgages (FRM); 7.1 percent chose ARMs.  Thirty-one percent chose 15-year FRM, the highest recorded since MBA changed their reporting metrics last January.  Those purchasing a home chose a 30-year FRM in 90.1 percent of cases; 7.7 percent applied for a15-year FRM and 6.6 percent picked an ARM.  

Purchase Index vs 30 Yr Fixed

Refinance Index vs 30 Yr Fixed

During the week just ended the average contract interest rate for 30-year conforming FRM was 4.18 percent compared to 4.24 percent the previous week.  Points, including the origination fee increased to 0.44 from 0.36. The average rate for jumbo 30-year FRMs (those with loan balances exceeding $417,500) decreased from 4.53 percent to 4.49 percent with points increasing to 0.41 from 0.39.  The effective rate decreased for both conforming and jumbo balance loans.  

The rate for a 15-year FRM was 3.49 percent with 0.45 point compared to 3.46 with 0.48 point the previous week.  The effective rate increased. 

A 5/1 ARM carried an average rate of 3.02 percent 0.41 point during the week.  The previous week the rate was 2.95 percent with 0.50 point.  The effective rate increased.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA  decreased to 4.05 percent from 4.06 percent, with points increasing to 0.69 from 0.42.  All rates are for 80 percent loan-to-value ratio loans.

"Interest rates continued to fall last week, driven by the latest Federal Reserve actions to invest in longer-term Treasury and mortgage securities, but potential borrowers largely remained on the sidelines, seemingly unimpressed by the lowest (by any measure) mortgage rates since the 1940s," said Mike Fratantoni, MBA's Vice President of Research and Economics. "Refinance application volume declined and purchase volume was little changed. Purchase borrowers continue to value the government lending programs that permit lower down payments. The government share of purchase applications decreased slightly to 41.6 percent last week, and while this is down from a recent peak of 50.4 percent in April 2010, it is still well above the pre-2009 survey average of 23.6 percent. Many refinance borrowers are opting to deleverage by moving to a 15-year term, with this product accounting for 27.0 percent of refinance volume last week."