Rates Are Down, Applications Are Up

By Kyle Chezum Updated on 9/25/2013

Plummeting mortgage rates last week resulted in a jump of 7.1% in mortgage applications, according to an industry trade group.

The Mortgage Bankers Association's market composite index, which is a measure of the nation's mortgage loan application volume, increased 7.1% on a seasonally adjusted basis. On an unadjusted basis, it rose 7% over the previous week.

In addition, the refinance index went up to 7.8%, and the seasonally adjusted purchase index saw a rise of 5.1% from last week.

"Treasury rates plummeted more than 20 basis points last week as all eyes were focused on the debt ceiling negotiations in Washington, and economic data depicted much slower than anticipated economic growth," Michael Fratantoni, MBA's vice president of research and economics, said. "Mortgage rates fell, with the rate on 15-year mortgages reaching a new low in our survey. Refinance application volume increased, but even though 30-year mortgage rates are back below 4.5 percent, the refinance index is still almost 30 percent below last year's level."

Despite the rise in applications, borrowers in the most recent week remained hampered by negative equity and a struggling job market, leading to a purchase index that the MBA defines as "weak by historical standards."

The four-week moving averages for the seasonally adjusted market index and the seasonally adjusted purchase index are both increased to 2.8% and 4.2%, and the four-week moving average on the purchase index dropped a slight 0.4%.

Refinancing application activity took another step ahead to 70.1%, up from 69.6% a week earlier.  The adjustable-rate mortgage's share of filing activity increased to 6.6% from 6.1%.

The 30-year, FRM remained well under 5% at 4.45%, down from 4.47% a week earlier, while the 15-year, FRM decreased to 3.52%, down from 3.67%, resulting in the lowest 15-year mortgage rate on record at the MBA.