The week ended September 12 saw the losses in application volume which occurred during the previous week which was shortened by the Labor Day holiday mostly reversed.  Mortgage application volume increased in most categories by nearly the same percentages as they had fallen during the week ended September 5. 

The Mortgage Bankers Association said that its Market Composite Index, a measure of mortgage application volume increased 7.9 percent from the previous week's seasonally adjusted index which had included an adjustment for the holiday.  On an unadjusted basis the Index increased by 19 percent, offsetting the 17 percent decline the previous week. 

The Refinance Index increased 10 percent from its level the previous week following an 11 percent decline.  Applications for refinancing as a percentage of all applications increased to 57 percent, the highest level since February, from 55 percent the previous week.

Purchase Index vs 30 Yr Fixed

Applications for home purchases increased 5 percent from a week earlier on a seasonally adjusted basis while the unadjusted Purchase Index increased 14 percent.  The adjusted and unadjusted indices had declined by 3 percent and 14 percent the previous week.  The unadjusted Purchase Index was 10 percent lower than during the same week in 2013.

Refinance Index vs 30 Yr Fixed

Mike Fratantoni, MBA's Chief Economist suggested that given the holiday related volatility it would be helpful to look at net change over a two week span.  "Refinance applications are down 1.4 percent while purchase applications are up 2.1 percent," he said.  "Purchase volume continues to track almost ten percent behind last year's levels."

He pointed out that application volume still managed to rebound after the holiday even as mortgage interest rates increased to their highest levels in the last few months.  For example, the rate for 30-year fixed rate mortgages (FRM) with conforming balances of $417,000 or more increased by 9 basis points to 4.36 percent, the highest level since June.  Points for that product were down to 0.20 from 0.25 but the effective rate still increased.

Rates for jumbo 30-year FRM (loan balances over $417000) also increased by 9 basis points to 4.34 percent while points decreased to 0.16 from 0.23.  The effective rate also increased.

The average contract interest rate for 30-year FHA-backed FRM rose to 4.03 percent from 3.97 percent, with points decreasing to 0.05 from 0.08.  The effective rate increased from the previous week.

The largest increase was for the 15-year FRM which jumped from 3.44 percent with 0.28 point to 3.56 percent with 0.25 point.  The effective rate was up.

The market share of adjustable rate mortgages (ARM) rose slightly from 7.5 to 7.6 percent despite an increase in interest rate of the most popular ARM product, the 5/1 hybrid, That rate increased to 3.19 percent from 3.12 percent, with points decreasing to 0.29 from 0.45.  The effective rate increased from the previous week.

MBA's application information is derived from its Weekly Mortgage Application Survey which has been conducted since 1990.  The survey covers over 75 percent of all U.S. retail mortgage applications and respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100 and interest rate information assumes a loan with an 80 percent loan-to-value ratio and points that include the origination fee.