The modest revival in refinancing applications continued again last week as mortgage interest rates retreated again. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of all mortgage application volume, increased 1.3 percent on a seasonally adjusted basis and 1 percent on an unadjusted basis during the week ended October 4. 

The increase was solely due to a pickup in applications for refinancing which increased from a 63 percent share of all applications to 64 percent.  The Refinancing Index was up 3 percent from its level during the week ended September 27 the highest for the index since August 9. 

Applications for home purchases languished with both the seasonally adjusted and unadjusted purchase indices down by 1 percent from the previous week.  The unadjusted index was 6 percent lower than during the same week in 2012, the second consecutive week that the unadjusted Purchase Index was lower than one year earlier.

Purchase Index vs 30 Yr Fixed

Refinance Index vs 30 Yr Fixed

While the movement in interest rates was small, all products tracked by MBA's Weekly Mortgage Applications Survey were down on both a contract and effective basis.  Contract rates all eased back to mid-June levels. 

The average contract interest rate for 30-year fixed-rate mortgages (FRM) with conforming loan balances ($417,000 or less) decreased to 4.42 percent from 4.49 percent.  Points increased to 0.44 from 0.34.  The average rate for the jumbo version of the 30-year FRM (balances greater than $417,000) decreased to 4.45 percent from 4.53 percent with points decreasing to 0.21 from 0.22. 

FHA-backed 30-year FRMs had an average contract rate of 4.15 percent with 0.37 point.  The previous week the rate was 4.21 percent with 0.35 point.

The rate for 15-year FRM was down 3 basis points from the previous week to an average of 3.52 percent. Points increased from 0.33 to 0.34.

Six percent of applications during the week were for adjustable rate mortgages (ARMs), unchanged from the week before.  The average rate for a 5/1 ARM was down to 3.25 percent from 3.26 percent.  Points increased to 0.29 from 0.28.

All rates quoted are for loans with an 80 percent loan-to-value ratio.  Points include the origination fee.

MBA's survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990.  Respondents include mortgage bankers, commercial banks and thrifts.  Base period and value for all indexes is March 16, 1990=100.