Declining rates, in one case returning to July 2016 levels, stoked mortgage application activity during the week ended September 30.  The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of application volume, increased 2.9 percent on a seasonally adjusted basis compared to the week ended September 23.  Unadjusted the index increased 3.0 percent.

The Refinance Index increased by 5 percent from the previous week and the share of refinancing applications increased to 63.8 percent of total activity, up from 62.7 percent a week earlier.

Purchasing applications lagged those of the previous week, dipping 0.1 percent on a seasonally adjusted basis and 0.2 percent unadjusted.  The unadjusted index fell below year-ago levels for the first time since July, down 14 percent.

Applications for FHA mortgages comprised 10.0 percent of all applications, dipping down from 10.2 percent the week before. The VA share of total applications decreased to 11 percent from 11.9 percent while the USDA share increased to 0.7 percent from 0.6 percent.

Contract interest rates were either down or unchanged and effective rates declined for all fixed rate mortgage products.  The average contract interest rate for 30-year fixed-rate mortgages (FRM) with conforming loan balances ($417,000 or less) decreased to 3.62 percent, the lowest level since July 2016, from 3.66 percent.  Points dipped to 0.32 from 0.33  

The average contract interest rate for 30-year FRM with jumbo loan balances (greater than $417,000) decreased to 3.60 percent from 3.64 percent.  Points decreased to 0.25 from 0.28

FHA-backed 30-year FRM had an average rate pf 3.50 with 0.16 point.  The previous week the rate was 3.52 percent, with 0.21 point.   

The average contract interest rate for 15-year FRM decreased 2 basis points to 2.93 percent.  Points dropped to 0.32 from 0.38  

While the average contract rate for 5/1 adjustable rate mortgages (ARMs) was unchanged at 2.92 percent, points rose to 0.44 from 0.40 pushing the effective rate higher.  The share of applications that were for ARMs ticked up to 4.5 percent from 4.4 percent.

MBA's Weekly Mortgage Applications Survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted since 1990. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100 and interest rate data is based on mortgages with an 80 percent loan-to-value ratio and points that include the origination fee.