Mortgage Applications Uptick in Early October

According to the Mortgage Bankers Association's latest Weekly Mortgage Applications Survey for the week ending October 2, 2020, U.S. mortgage applications increased 4.6 percent from one week earlier.

The Market Composite Index, a measure of mortgage loan application volume, increased 4.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 5 percent compared with the previous week.

The Refinance Index increased 8 percent from the previous week and was 50 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 21 percent higher than the same week one year ago.

"Mortgage rates declined across the board last week - with most falling to record lows - and borrowers responded. The refinance index jumped 8 percent and hit its highest level since mid-August," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Continuing the trend seen in recent months, the purchase market is growing at a strong clip, with activity last week up 21 percent 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."

Added Kan, "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."

The refinance share of mortgage activity increased to 65.4 percent of total applications from 63.3 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 2.2 percent of total applications.

The FHA share of total applications decreased to 11.0 percent from 11.4 percent the week prior. The VA share of total applications increased to 12.2 percent from 11.9 percent the week prior. The USDA share of total applications remained unchanged from 0.5 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.01 percent from 3.05 percent, with points decreasing to 0.37 from 0.52 (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 $510,400) decreased to 3.31 percent from 3.33 percent, with points decreasing to 0.3 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 30-year fixed-rate mortgages backed by the FHA decreased to 3.12 percent from 3.15 percent, with points decreasing to 0.32 from 0.43 (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 2.59 percent from 2.65 percent, with points decreasing to 0.36 from 0.49 (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 decreased to 2.80 percent from 2.95 percent, with points decreasing to 0.34 from 0.55 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.