In a new Weekly Mortgage Applications Survey issued by the Mortgage Bankers Association (MBA), applications for mortgage loans jumped a whopping 11.3 percent in the week ending Aug. 28 compared to the prior week.
This information was verified through the Market Composite Index, which is a tool used to measure the volume of mortgage loan applications. According to the index, on a seasonally adjusted basis, the recent increase was greater than 11 percent. Even looking at the index on an unadjusted basis, the increase was an impressive 10 percent from the week before.
On another index called the Refinance Index, from the prior week the number of loan applications rose 17 percent, reaching the highest level since April of this year. Then on the Purchase Index, using a seasonally adjusted basis the increase was 4 percent, the highest since July; on an unadjusted basis, the increase was 2 percent. When compared to the same time last year, the unadjusted level saw a 26 percent jump.
While mortgage rates remained the same during that week, there was a sharp decline in Treasury notes. According to experts, this was due to the global stock market rout and the reason mortgage applications rose so dramatically.
Of total applications, the refinance share of mortgage activity climbed from 55.3 percent to 58.7 percent. Adjustable rate mortgage (ARM) rose 7.5 percent of total applications. The share of total applications for FHA dropped from 13.1 percent to 12.7 percent, the USDA share fell from 0.8 percent to 0.7 percent, and the share of VA for total applications decreased from 11.4 percent to 9.8 percent.
Regarding interest for the average contract for a 30-year fixed rate mortgage (FRM) specific to conforming loan balances of $417,000 or less, there was no change. In this case, interest stayed at 4.08 percent. In addition, points rose from 0.36 to 0.37, which included the origination fee on LTV loans. Compared to the previous week, the effective rate did not change.
Other changes included the interest rate for the average contract for 30-year FRM loans with FHA backing. These dropped from 3.9 percent to 3.87 percent. On the other hand, there was an increase in points, jumping from 0.21 percent to 0.32 percent, including the origination fee and again for 80 percent LTV loans.
As far as the average contract interest rate for 5/1 ARMS, these increased from 2.96 percent to 3.05 percent while the points to include the origination fee for 80 percent LTV loans remained unchanged at 0.36 percent. For 15-year FRM mortgages, the average contract interest rate dropped from 3.33 percent to 3.30 percent. Along with this were decreasing points from 0.31 percent to 0.26 percent, again to include the origination fee on 80 percent LTV loans.
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