Mortgage application volume increased last week for the first time since the week ended September 12.  The Mortgage Bankers Association (MBA) said that its Market Composite Index, a measure of that volume, increased 3.8 percent on a seasonally adjusted basis during the week ended October 3 compared to the previous week.  On an unadjusted basis the index was 4 percent higher than during the week ended September 26.

Responses to MBA's Weekly Mortgage Application Survey which covers 75 percent of all U.S. retail mortgage applications pushed the Refinancing Index up 5 percent. The share of all mortgage applications that were for refinancing remained at 56 percent for the third consecutive week.

Refinance Index vs 30 Yr Fixed

The seasonally adjusted Purchase Index increased 2 percent to the highest level since July and the unadjusted Purchase Index increased 2 percent week-over-week.  The unadjusted Purchase Index was 8 percent lower than during the same week in 2013, marking the smallest year-over-year decrease since January. 

Purchase Index vs 30 Yr Fixed

Both the contract interest rate and the effective rate decreased during the week for all mortgage products tracked by the MBS survey.  The most significant change in rates was for the hybrid 5/1 adjusted rate mortgage (ARM) which declined from 3.31 percent to 3.20 percent while points fell to 0.37 from 0.51.  ARMs had a 7.8 percent market share during the week compared to 7.6 percent the week before.

The average contract rate for 30-year fixed rate mortgages (FRM) with conforming balances of $417,000 decreased from 4.33 percent with 0.31 point to 4.30 percent with 0.19 point.  The jumbo version of the 30-year FRM, loans with a balance over $417,000, had a rate for the week that averaged 4.21 percent with 0.29 point.  The previous week the contract rate had been 4.28 percent with 0.15 point.

FHA-backed 30-year FRM had an average rate of 4.00 percent compared to 4.07 percent the previous week.  Points increased to 0.15 from 0.04.

The average rate for 15-year FRM decreased 7 basis points to 3.48 percent.  Points increased to 0.32 from 0.25.

Respondents to the MBA weekly survey which has been conducted since 1990 include mortgage bankers, commercial banks, and thrifts.  Interest rates are based on mortgages with an 80 percent loan to value ratio and points include the origination fee.  Base period and value for the application volume indexes is March 16, 1990=100.