For the week ending October 10, 2014 mortgage applications increased 5.6 percent from a week earlier, according to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey. Several weeks ago mortgage applications were at their lowest level in 14 years so this increase is much needed.
Refinance Activity Jumps
Refinance activity also increased a whopping 11 percent from the week before. The increases were attributed to a significant influx of mortgage bond purchases due to weak economic growth in Europe, and a move toward higher quality assets in the United States. Refinances comprised 59 percent of all total mortgage applications which were at 56 percent a week earlier. Of all total applications, adjustable rate mortgages showed an eight percent increase. Overall, weak global economic growth significantly contributed to the drop as rates fell to their lowest levels since June of 2013.
Falling Mortgage Rates
30 year jumbo loan ($417,000 or more) rates also decreased to 4.14 percent from 4.21 percent, the lowest since May 2013, while the contract interest rate decreased to 4.14 percent from 4.21 percent for conforming 30 year-fixed-rate mortgages ($417,000 or less).
ARM’s also saw a large decline. The average interest rate fell drastically for 5/1 adjustable rate mortgages, to 3.05 percent from 3.20 percent. Total Applications for FHA backed mortgages also dropped 3.9 percent during the same time frame.
The Mortgage Bankers Association (MBA) represents the real estate finance industry from every community in the United States. The number of weekly mortgage applications is monitored by the Market Composite Index. The market composite index measures over 50 percent of all retail residential mortgage applications in the United States, and has been conducted since 1990. The institutions that respond to surveys that are used to compile the index primarily consist of commercial banks, mortgage bankers and thrifts.