Mortgage applications fell last week, running into the Labor Day holiday, but purchase-only applications surged, the Mortgage Bankers Assn. said Wednesday.
The MBA's Market Composite Index decreased 1.5% on a seasonally adjusted basis from the previous week, driven by a 3.1% decline in the Refinance Index. The seasonally adjusted Purchase Index increased 6.3% from the week before. Still, the Purchase Index remained 38.8% lower than the comparable week in 2009.
"Purchase applications increased last week, reaching the highest level since the end of May," said Michael Fratantoni, MBA's vp/research and economics. "On the other hand, refinance volume dropped last week for the first time in six weeks, but the level of applications to refinance remains close to recent highs, as historically low mortgage rates continue to draw borrowers into the market."
The four week moving average for the seasonally adjusted Market Index is up 4.4%; for the Purchase Index it is up 1.3% and for the Refinance Index it is up 5%.
The average contract interest rate for 30-year fixed-rate mortgages increased to 4.50% from 4.43%, with points decreasing to 0.96 from 1.34 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The average rate for 15-year fixed-rate mortgages increased to 4.00% from 3.88%, with points decreasing to 0.87 from 1.45. The rate for one-year ARMs increased to 7.00% from 6.95%, with points decreasing to 0.21 from 0.23.
UBS analyst David Goldberg said in a research note that "the index continued to rise off its 7/9 low, the weakest in has been over the last two-and-a-half years, and also showed sequential strength, in line with recent anecdotes that suggest demand for housing has seen a slight improvement recently."