The up-and-down pattern for mortgage application activity continued, as volume rose 4.6% from one week earlier led by refinancings, according to the Mortgage Bankers Association.
Since the start of September, the pattern has been a week of increased application volume followed by a down one, echoing trends in refi activity.
The MBA's Weekly Mortgage Applications Survey for the week ending Oct. 2 found that the refinance index increased 8%
"Mortgage rates declined across the board last week — with most falling to record lows — and borrowers responded. The refinance index hit its highest level since mid-August," Joel Kan, the MBA's associate vice president of economic and industry forecasting, said in a press release. "Continuing the trend seen in recent months, the purchase market is growing at a strong clip, with activity last week up 21% from a year ago. The average loan size increased again to a new record at $371,500, as activity in the higher loan size categories continues to lead growth."
However, the purchase index decreased 2% on a seasonally adjusted basis and 1% unadjusted compared with the previous week.
"There are signs that demand is waning at the entry-level portion of the market because of supply and affordability hurdles, as well as the adverse economic impact the pandemic is having on hourly workers and low- and moderate-income households. As a result, the lower price tiers are seeing slower growth, which is contributing to the rising trend in average loan balances," Kan added.
Adjustable-rate mortgage activity remained unchanged at 2.2% of total applications, while the share of Federal Housing Administration-insured loan applications decreased to 11% from 11.4% the week prior.
The share of applications for Veterans Affairs-guaranteed loans increased to 12.2% from 11.9% and the U.S. Department of Agriculture/Rural Development share remained unchanged from 0.5% the week prior.
Meanwhile for the second consecutive week, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) fell to a record low as measured by the MBA, decreasing 4 basis points to 3.01%. For jumbo 30-year FRMs (loan balances greater than $510,400), the average contract rate decreased 2 basis points to 3.31%.
Average contract interest rates for 30-year FHA-insured FRMs decreased 3 basis points to 3.12%. For 15-year FRMs, the average contract interest rate decreased 6 basis points to 2.59%, and for 5/1 ARMs, it decreased to 2.8% from 2.95%.
