The Mortgage Bankers Association (MBA) released its weekly report on mortgage applications Wednesday morning, noting a rise of 5.2% in the group’s seasonally adjusted composite index for the week ending October 4. Mortgage interest rates fell on all five loan types the MBA tracks.
On an unadjusted basis, the MBA’s composite index increased by 5% in the past week. The seasonally adjusted purchase index dipped by 1% compared with the week ended September 27. The unadjusted purchase index also slipped by 1% for the week and was 10% higher year over year.
Mortgage loan rates for a top-tier 30-year fixed-rate loan dipped from 3.75% to 3.62% last week, according to Mortgage News Daily. As of Tuesday night, top-tier borrowers were paying 3.61% for that loan. The week-over-week yield on a 10-year U.S. Treasury note slid from 1.63% to 1.53% as of last night’s close. A year ago, the 10-year note yielded 3.21%.
Joel Kan, MBA’s associate vice president of economic and industry forecasting, said:
U.S. Treasury rates moved sharply lower last week, as data showing weakness in the services sector was a sign that slowing economic growth is not confined to the manufacturing sector. This in turn caused a flight to safety by investors, resulting in mortgage rates dropping across the board, with the 30-year fixed rate decreasing nine basis points to 3.9 percent – the lowest level in a month. … Purchase activity was muted, declining almost 1 percent, but was still 10 percent higher than a year ago. Despite low rates, the cloudier economic outlook and ongoing market uncertainty may be keeping some potential homebuyers away from the market this fall.
The MBA’s refinance index increased by 10% week over week (on top of a 14% jump in the previous week) and the percentage of all new applications that were seeking refinancing rose from 58.0% to 60.4%.
Adjustable-rate mortgage loans accounted for 5.3% of all applications, down by 0.2 percentage points compared with the prior week.
According to the MBA, last week’s average mortgage loan rate for a conforming 30-year fixed-rate mortgage fell from 3.99% to 3.90%. The rate for a jumbo 30-year fixed-rate mortgage dipped from 3.98% to 3.90%. The average interest rate for a 15-year fixed-rate mortgage decreased from 3.43% to 3.35%.
The contract interest rate for a 5/1 adjustable-rate mortgage loan fell from 3.42% to 3.25%. Rates on a 30-year FHA-backed fixed-rate loan dropped from 3.79% to 3.75%.