The Mortgage Bankers Association (MBA) reported that mortgage applications were down significantly during the week ended October 7, probably responding to an uptick that carried mortgage interest rates back up to their early September levels. The Market Composite Index, MBA's measure of mortgage loan application volume, decreased 6.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index was also down 6 percent.

Both the Refinancing and the Purchase Indices declined on a week-over-week basis but the Refinance Index had the larger impact on the Composite Index, falling 8 percent from the week ended September 30 and reaching its lowest level since June. Refinancing's share of total activity also fell, down to 62.4 percent from 63.8 percent.

The seasonally adjusted Purchase Index decreased 3 percent while unadjusted it was down 2 percent compared with the previous week and was 27 percent higher than the same week one year ago.

The FHA share of total applications increased to 10.9 percent from 10.0 percent and the VA share rose to 12 percent from 11.4 percent. The USDA share of total applications remained unchanged at 0.7 percent.

Interest rates increased on both a contract and an effective basis for all but the 5/1 adjustable rate mortgage (ARM).  The average contract interest rate for 30-year fixed-rate mortgages (FRMs) with conforming loan balances ($417,000 or less) was 3.68 percent, up from 3.62 percent, with points increasing to 0.35 from 0.32  

The rate for 30-year FRMs with jumbo loan balances (greater than $417,000) jumped to 3.67 percent, from 3.60 percent.  Points eased back to 0.24 from 0.25.

The average contract interest rate for 30-year FRMs backed by the FHA was 3.54 percent with 0.23 point.  The previous week the rate was 3.50 percent with 0.16 point.

Fifteen-year FRM contract rates ticked up to 2.97 percent from 2.95 percent.  Points increased to 0.34 from 0.32.

The average contract interest rate for 5/1 ARMs remained at 2.92 percent for the second straight week although points, which rose a week earlier, decreased to 0.28 from 0.44 and the effective rate decreased. The ARM share of activity decreased to 4.1 percent of total applications from 4.5 percent.

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