Applications for new mortgages rose last week, increasing by more than 7% over the week before, according to new reports from the Mortgage Bankers Association.
The refinance index saw an increase of 7.8%, while the real gauge for mortgage requests, the purchase index, jumped up by 5.1%.
According to MBA research and economics vice president Michael Fratantoni:
“Treasury rates plummeted more than 20 basis points last week as all eyes were focused on the debt ceiling negotiations in Washington, and economic data depicted much slower than anticipated economic growth,”
He went on to point out that mortgage rates had also dropped, with 15-year mortgage rates reaching their lowest point.
“The volume of refinance applications also rose,” he added, “but while the rates for 30-year mortgages are once again below 4.5%, the refinance index is still down 30% from the previous year’s level.”
The MBA defined the current purchase index as “weak by historical standards”, as borrowers are still heavily restricted by a weak job market and negative equity, it explained.
According to them, the seasonally adjusted market index’s four week moving average is up 2.8%, while the seasonally adjusted purchase index rose by 4.2%. Meanwhile, the portion of mortgage applications tied to refinancing also grew, from 69.6% a week before to 70.1% at the end of last week. The share of mortgages tied to the adjustable-rate also rose, from 6.1% to 6.6%.