U.S. Mortgage Rates Drop to New Lows, Driving Higher Mortgage Application Volumes

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According to the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending September 21, 2012, mortgage applications increased 2.8 percent from one week earlier.

The Market Composite Index, a measure of mortgage loan application volume, increased 2.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 3 percent compared with the previous week.

The Refinance Index increased 3 percent from the previous week to the highest level in six weeks. The seasonally adjusted Purchase Index increased 1 percent from one week earlier.

The unadjusted Purchase Index decreased 0.3 percent compared with the previous week and was 5 percent higher than the same week one year ago.

The refinance share of mortgage activity increased to 81.2 percent of total applications from the previous week, the highest refinance share since early August. The adjustable-rate mortgage (ARM) share of activity decreased to 4 percent of total applications.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 3.63 percent, the lowest rate in the history of the survey, from 3.72 percent, with points decreasing to 0.41 from 0.45 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) decreased to 3.87 percent, the lowest rate in the history of the survey, from 3.99 percent, with points decreasing to 0.33 from 0.35 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.44 percent, the lowest rate in the history of the survey, from 3.50 percent, with points decreasing to 0.41 from 0.57 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.98 percent, the lowest rate in the history of the survey, from 3.03 percent, with points increasing to 0.41 from 0.39 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs remained unchanged at 2.61 percent, matching the lowest rate in the history of the survey, with points increasing to 0.41 from 0.32 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.