Mortgage Loan Rates Encourage More Purchase Applications

The Mortgage Bankers Association (MBA) released its weekly report on mortgage applications Wednesday morning, noting an increase of 5.5% in the group's seasonally adjusted composite index, following a rise of 11.2% for the previous week. Mortgage loan rates once again fell slightly across the board last week.

The seasonally adjusted purchase index increased by 7% from last week's report to its highest level in three months. On an unadjusted basis, the composite index rose by 5% week-over-week. The unadjusted purchase index increased by 5% for the week and is up 7% year-over-year.

The MBA's refinance index rose by 5%, after increasing by 13% in the previous week.

The share of refinancings remained unchanged at 61%. Adjustable rate mortgage loans account for 7% of all applications.

The average mortgage loan rate for a conforming 30-year fixed-rate mortgage decreased from 4.75% to 4.62%. The rate for a jumbo 30-year fixed-rate mortgage fell from 4.83% to 4.66%. The average interest rate for a 15-year fixed-rate mortgage fell from 3.81% to 3.68%.

The contract interest rate for a 5/1 adjustable rate mortgage loan dropped from 3.54% to 3.39%.

Interest rates came down slightly last week and purchase applications rose sharply. This is the second consecutive weekly gain in applications and the second consecutive drop in mortgage loan rates. Later this morning, the U.S. Census Bureau will report new home sales for August. The consensus estimate calls for a gain to a 425,000 seasonally adjusted annual rate.

Filed under: Housing