Once again, a slowdown in refinancing overcame a slight improvement in applications for purchase mortgages, sending the Mortgage Bankers Association's (MBA's) Market Composite Index lower for the week ended September 29.  The Index, a measure of application volume, declined 0.4 percent on a seasonally adjusted basis from its level the previous week, and was down 1 percent on an unadjusted basis.

The Refinance Index fell by 2 percent, but refinancing still maintained, by a slim edge, the larger share of applications, 50.1 percent, down from 50.8 percent a week earlier.

Purchase mortgage volume improved modestly; the index reflecting those applications increased 1 percent on both an adjusted and an unadjusted basis.  The unadjusted index remained 5 percent higher than during the same week in 2016.

There was a small uptick overall in the demand for government-backed mortgages. The FHA share of applications increased to 10.0 percent from 9.6 percent a week earlier and the USDA portion was 0.8 percent, up from 0.7 percent. The VA share was unchanged at 10.0 percent.

The average contract interest rate for conforming 30-year fixed-rate mortgages (FRM), those with loan balances of $424,100 or less, increased to 4.12 percent from 4.11 percent. Points rose to 0.45 from 0.40, pushing the effective rate higher.   

Thirty-year FRM with jumbo loan balances (greater than $424,100) had an average contract rate of 4.09 percent. up from 4.06 percent a week earlier.  Points were unchanged at 0.26 and the effective rate was up.   

The average rate for 30-year FRM backed by the FHA was 3.99 percent with 0.37 point compared to 3.98 percent with 0.50 point the previous week. The effective rate decreased.

The 15-year FRM saw an increase in the average contract rate from 3.38 percent to 3.42 percent. Points declined to 0.39 from 0.40 and the effective rate was higher.  

Both contract and effective rates for 5/1 adjustable rate mortgages (ARMs) were down. The contract rate averaged 3.30 percent, 8 basis points lower than the prior week, and points ticked down to 0.43 from 0.45. Applications for ARMs had a 6.0 percent share of overall activity, dropping from 6.5 percent the week before.  

 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.