Mortgage applications increased 16.6 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 28, 2012. 

The Market Composite Index, a measure of mortgage loan application volume, increased 16.6 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 17 percent compared with the previous week.  The Refinance Index increased 20 percent from the previous week.  This was the highest Refinance Index recorded in the survey since April of 2009.  The seasonally adjusted Purchase Index increased 4 percent from one week earlier. The unadjusted Purchase Index also increased 4 percent compared with the previous week and was 11 percent higher than the same week one year ago.

“Refinance application volume jumped to the highest level in more than three years last week as each of the five mortgage rates in MBA's survey dropped to new record lows in the survey,” said Mike Fratantoni, MBA’s Vice President of Research and Economics. “Financial markets continue to adjust to QE3, as the ongoing presence of the Federal Reserve as a significant buyer of mortgage-backed securities applies downward pressure on rates.  Although there was a slight decline in the HARP share of refinance activity, the level of HARP volume remains steady.”

The refinance share of mortgage activity increased to 83 percent of total applications from 81 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained at 4 percent of total applications. The HARP share of refinance applications decreased to 23 percent last week from 26 percent the prior week.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 3.53 percent from 3.63 percent, with points decreasing to 0.35 from  0.41 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.  The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) decreased to 3.82 percent from 3.87 percent, with points decreasing to 0.32 from 0.33 (including the origination fee) for 80 percent LTV loans.  The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.37 percent from 3.44 percent, with points decreasing to 0.36 from 0.41 (including the origination fee) for 80 percent LTV loans.  The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.90 percent from 2.98 percent, with points decreasing to 0.27 from 0.41 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 2.59 percent from 2.61 percent, with points decreasing to 0.34 from 0.41 (including the origination fee) for 80 percent LTV loans.  The effective rate decreased from last week.