WASHINGTON (10/8/15)--Mortgage applications for the week ending Oct. 2 surged by 25.2%, the third-fastest gain on record, according to the Mortgage Bankers Association’s weekly mortgage applications survey (Economy.com Oct. 7).
Purchase applications jumped by 27.4%, pushing activity to a five-year high, while refinance applications leapt by 24.2%--largely driven by lower mortgage rates, according to Moody’s.
“Mortgage application volume is notoriously volatile, but purchase applications have been trending higher since the beginning of the year,” said Michael Ferlez, Moody’s analyst (Economy.com). “Refinancing remains in high gear and shows little evidence of fading, especially given the Fed’s decision not to raise interest rates, which will keep mortgage rates near historical lows at least through the end of this year.”
The four-week moving average for purchase applications climbed 8%, while on a year-over-year basis purchase applications rose 28%. Furthermore, refinance applications increased by 4.4% during the four weeks ending Oct. 2 and came in 34.6% higher annually. For the week ending Oct. 2, refinance applications comprised 57.4% of all applications.
Mortgage rates also remain pinned at historically low levels.
The contract rate for 30-year fixed-rate mortgages slipped 9 basis points to 3.99% for the week. That’s 11 basis points lower than the rate four weeks prior and 31 basis points lower than its year-ago level.
For 30-year fixed-rate jumbo mortgages, the rate dropped to 3.89%, while the five-year adjustable-rate mortgage rate climbed 1 basis point to 2.96%, which is 24 basis points lower than its year-ago level.
“Despite last month’s weak job report, the U.S. economy remains on firm footing,” Ferlez said. “The labor market will begin to tighten into 2016, which will lead to higher wage growth, in turn boosting housing demand and house prices. Additionally, improving consumer confidence and expanding mortgage credit should give potential homebuyers the confidence to make purchase applications.”