Overall mortgage application activity diminished significantly during the week ended September 15, but refinancing continued to hold its own, representing more than half of the mortgage applications received. The Mortgage Bankers Association says its Market Composite Index, a measure of that volume was down 9.7 percent on a seasonally adjusted basis compared to the week ended September 8.  The earlier week's data included an adjustment to account for the Labor Day holiday.  On a non-adjusted basis, the Composite Index increased 12 percent. 

"At first glance, we might assume that last week's interest rate spike easily explains the drop in apps," notes Mortgage News Daily's Matt Graham, "but then we see MBA's rate survey only shows a 0.01% rise.  It's good to remember that survey rates are going to lag the reality that consumers are experiencing on the front lines.  To anyone considering applying for a mortgage last week, it was clear from day one that rates were moving quickly higher.  On Monday alone, rates effectively rose 0.05% and repeated that performance on Tuesday.  Bottom line, rates could easily account for most of this week's change in apps."

The Refinance Index lost 9 percent from the previous week's level, but the refinance share increased to 52.1 percent of total applications from, a 51.0 percent share the week before.  It was the largest allotment for refinancing since January 13.

The seasonally adjusted Purchase Index declined 11 percent while the unadjusted Purchase Index gained 10 percent compared with the previous week.  The unadjusted index was 2 percent higher than the same week one year ago.

Both the FHA and the USDA share of total applications were unchanged from the previous week at 9.9 percent and 0.7 percent respectively. VA loans received 10.1 percent of the week's business, down from 10.3 percent a week earlier.

Interest rates, both contract and effective, moved slightly higher for most loan types, the exception being the jumbo loan.  The average contract interest rate for 30-year fixed-rate mortgages (FRM) with conforming loan balances of $424,100 or less, was 4.04 percent compared to 4.03 percent the previous week. Points were unchanged at 0.40.

Jumbo 30-year FRMs, those with balances greater than $424,100, had a slightly lower rate, 3.99 percent with 0.23 point compared to 4.00 percent with 0.24 point.  The effective rate decreased from last week. 

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.97 percent from 3.94 percent.  Points were unchanged at 0.34.

Fifteen-year fixed rate mortgages saw a 5-basis point increase in the average rate, to 3.35 percent.  Points rose to 0.44 from 0.39.  

The share of adjustable rate mortgage (ARM) applications ticked up to 6.8 percent from 6.7 percent.  The average contract interest rate for 5/1 ARMs jumped to 3.30 percent from 3.17 percent the previous week, with points dropping to 0.34 from 0.36.  

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.