Mortgage application activity declined during the week as the 30-year mortgage rate crossed the 5.0 percent line for the first time in seven years and other products moved to new seven or eight year highs.  The Mortgage Bankers Association (MBA) said its Market Composite Index, a measures of application volume, declined by 1.7 percent on a seasonally adjusted basis during the week ended October 5.  On an unadjusted basis the index was down by 2.0 percent.

The seasonally adjusted Purchase Index lost ground for the first time in six weeks, decreasing by 1 percent compared to the previous week, and was down by 1.0 percent on an unadjusted basis as well.  The unadjusted version remained 2.0 percent higher than during the same week in 2017.  The Refinance Index fell by 3.0 percent and the share of total applications that were for refinancing dipped to 39.0 percent from 39.4 percent during the week ended September 28.

Refi Index vs 30yr Fixed

Purchase Index vs 30yr Fixed

The distribution of loan applications among product types shifted only slightly.  The FHA share rose to 10.5 percent from 10.2 percent, the VA share was unchanged at 10.0 percent and USDA applications accounted for 0.8 percent, up from 0.7 percent the prior week.

Contract interest rates moved higher for all loan products and for all but the FHA-backed loans on an effective basis.  The 30-year fixed-rate mortgage (FRM) with origination balances at or below the conforming limit of $453,100 had an average rate of 5.05 percent, up from 4.96 percent the previous week and the highest level since February 2011. Points increased from 0.49 to 0.51.

Jumbo FRM, loans with balances exceeding the conforming limit, moved to the highest level since July 2011, 4.99 percent with 0.35 point.  The previous week the rate was 4.93 percent with 0.31 point.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to its highest level since April 2011, 4.98 percent, from 4.95 percent. Points dropped to 0.63 from 0.80, pulling the effective rate lower.

The average contract interest rate for 15-year fixed-rate mortgages increased 5 basis points to 4.44 percent, the highest rate since April 2010.  Points increased to 0.58 from 0.50.

The average contract interest rate for 5/1 adjustable rate mortgages (ARMs) increased to its highest level since the series began in 2011, 4.29 percent with 0.52 points.  The prior week the rate was 4.24 percent, with 0.48 point.  The ARM share of activity increased from 7.1 to 7.3 percent of total applications, the highest since early March.

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