WASHINGTON (10/1/15)--After a 13.9% surge in mortgage application activity the prior week, applications sharply corrected themselves the week ending Sept. 25 with a 6.7% drop, according to the Mortgage Bankers Association’s weekly survey (Economy.com Sept. 30).
The refinance index fell by 7.5% for the week, while the purchase index slipped by 5.6%. Still, the four-week moving average for both indexes illustrated a positive trend, with refinancing activity up 1.3% over the last month and purchase activity up 2.4%.
“The strong performance of the Sept. 18 mortgage applications survey appears to have only been temporary, as homebuyers overreacted to the Federal Reserve’s decision not to raise rates,” said Michael Ferlez, Moody’s analyst (Economy.com).
Refinancing activity comprised 58% of all applications for the week, while adjustable-rate mortgages made up 6.9% and Federal Housing Administration loans made up 13.8%, a slight uptick.
Meanwhile, the 30-year fixed-rate mortgage rate dropped by 1 basis point to 4.08%--unchanged over the last four weeks and 25 basis points below levels seen a year ago. The 30-year fixed-rate jumbo mortgage rate slipped to 3.96%, according to Moody’s.
The five-year adjustable-rate mortgage rate also stood pat at 2.95% and came in 36 basis points lower than its level a year ago.
“Despite the volatility in mortgage applications, all the conditions for a pickup in housing demand are in place,” Ferlez said. “Employment growth has been averaging over 200,000 jobs per month, incomes will continue to rise as demand for skilled workers rises, and mortgage lending standards are loosening.”