The rate drop spurred consumers back into the volatile refinance market, although purchase application volume also rose.
Meanwhile, the seasonally adjusted purchase index increased 1% from one week earlier, while the unadjusted purchase index increased 1% compared with the previous week and was 10% higher than the same week one year ago.
“Mortgage rates mostly decreased last week, with the 30-year fixed rate dropping below 4% for the sixth time in the past nine weeks,” Joel Kan, the MBA’s associate vice president of economic and industry forecasting, said in a press release. “Borrowers responded to these lower rates. Although refinance activity slowed in September compared to August, the months together were the strongest since October 2016. The slight changes in rates are still causing large swings in refinance volume, and we expect this sensitivity to persist.”
Adjustable-rate mortgage activity increased to 5.5% from 5.1% of total applications and the share of Federal Housing Administration-insured loan applications decreased to 10.4% from 11.4% the week prior.
The share of applications for Veterans Affairs-guaranteed loans decreased to 12.4% from 13.1% and the U.S. Department of Agriculture/Rural Development share decreased to 0.5% from 0.6% the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased 3 basis points to 3.99%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350), the average contract rate decreased 2 basis points to 3.98%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased 11 basis points to 3.79%. For 15-year fixed-rate mortgages, the average decreased 3 basis points to 3.43%. The average contract interest rate for 5/1 ARMs increased 3 basis points to 3.42%.
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