Mortgage applications dropped sharply during the week ended October 14, falling 14.9 percent on both a seasonally adjusted and an unadjusted basis.   According to the Mortgage Bankers Association (MBA), which issued its Weekly Mortgage Applications Survey, the change in its Market Composite Index which measures loan application volume, came from losses in every sector of the market.

During the week, which included Columbus Day a holiday which affects only parts of the economy, the Refinance Index dropped 16.6 percent from the week ended October 14 and the seasonally adjusted Purchase Index was down 8.8 percent to the lowest level in the survey since December 1996.  The unadjusted Purchase Index was down 8.6 percent from the previous week and 5.1 percent from the same week in 2010.   Both conventional and government purchase activity were down as well with the Conventional Purchase Index decreasing 11.0 percent and the Government Purchase Index 5.9 percent.

The indices were all down on a year-over-year basis with the exception of the Government Purchase Index which increased 3.3 percent on an unadjusted basis, the second straight increase.  It is now at 43.5, the highest level since April 2011.  The four week moving average for the seasonally adjusted Market Index is down 2.35 percent while the moving averages for the Refinancing Index and the seasonally adjusted Purchase Index fell 2.58 percent and 1.53 percent respectively.

Refinancing applications represented 77.6 percent of all applications for the week, down from 79.1 percent and the share of applications for adjustable-rate mortgages (ARM) was 5.8 percent compared to 6.0 percent the previous week.  Purchase applications rose in the Pacific region by 7 basis points to 19.6 percent while falling in every other region.

Purchase Index vs 30 Yr Fixed

Refinance Index vs 30 Yr Fixed

Both actual and effective interest rates rose during the week for all types of 80 percent loan-to-value loans.  Average rates for conforming 30-year fixed-rate mortgages (FRM) increased to 4.33 percent from 4.25 percent and points, including the origination fee, increased to 0.48 from 0.47. Rates for 30-year mortgages with jumbo loan balances (over $417,500) increased from 4.59 percent to 4.64 percent with points decreasing from 0.49 to 0.45 point.  FHA-backed 30-year FRM increased 6 basis points to 4.12 percent with points decreasing to 0.53 from 0.58.

The average rate for 15-year FRM rose from 3.53 percent to 3.61 percent with points declining from 0.45 to 0.43 while the rate for 5/1 ARMS moved from 3.03 percent with 0.54 point to 3.08 percent with 0.48 point.   

MBA's survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990 among mortgage bankers, commercial banks and thrifts.  Base period and value for all indexes is March 16, 1990=100.