Mortgage application volume increased 5.2% on an adjusted basis during the week ended Oct. 4, as the average rate for a 30-year, fixed-rate mortgage fell to 3.90%, down from 3.99% the previous week, according to the Mortgage Bankers Association’s (MBA) Weekly Applications Survey.
Applications for refinances increased 10% from the previous week and were 163% higher compared with the same week one year earlier.
Applications for purchases decreased 1%.
On an unadjusted basis, total volume increased 5%. Applications for purchases decreased 1% on an unadjusted basis but were 10% higher compared with the same week one year earlier.
“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,” says Joel Kan, associate vice president of economic and industry forecasting for the MBA, in a statement. “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.
“As seen a few times this year, the large drop in rates caused another surge in refinance applications,” Kan says. “The refinance index increased 10 percent to its highest level since late August, with both conventional and government refinances experiencing an upswing. 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,” Kan adds.
The refinance share of mortgage activity increased to 60.4% of total applications, up from 58.0% the previous week.
The adjustable-rate mortgage (ARM) share of activity decreased to 5.3% of total applications.