There came a huge drop in interest rates drove the homebuyers and homeowners to mortgage market in last week. According to Mortgage Ban, total application volume of mortgages was increased by 3% on seasonal adjusted basis from previous week, but it came down by 25% a year ago.
Increased activity by mortgages was buoyed by the applications which refinance the home loans, that increased by 5% from the last week but it can down by 44% from a year ago.
Mike Fratantoni, Chief Economist at MBA said that mortgage rates were decreased during last week, which led to highest volume of the refinance applications since mid of June. A sight drop in rates is likely to reflect in concern about weakness in the certain data which was released earlier in week, like drop in auto sales, but market too reacted to be stronger than expected job growth in employment report on Friday.
Interest rate for average contract for 30 years fixed rates mortgages having conforming loan balance, which was dropped to 4.14% from 4.17% with increased points up to 0.38 from 0.36 for 80% loan to value ratio loan.
Frantantoni said that there was around 15% increase in the government refinance applications which helped to boost up the refinance applications. There was a jump of 17% last week in VA refinances.
Applications to buy home also increased by 1% as comparatively to the previous week. Fratantoni said that with the rates trading in narrow range, purchase market still continue to show the strength with application volume that run about 7% ahead of the last year.
Applications of refinance also increased to 46.7% of the total applications from 45.5% during last week. Adjustable rates of mortgages share total mortgage activity which was increased by 6.8%. Share of FHA of total applications decreased to 10.2% from 10.3% as per the previous week. VA share of total applications got increased to 10.7% from 10.1% comparatively to the previous week.