Mortgage Purchase Applications Surge Higher

Washington, DC, Oct. 6, 2010--Mortgage application volume fell 0.2% from one week earlier on lower demand for refinancing, while demand for purchase mortgages rose to the highest level since May.

The Refinance Index decreased 2.5%. The Purchase Index increased 9.3% from one week earlier and is at its highest level since May. The unadjusted Purchase Index increased 9.1% compared with the previous week and was 34.7% lower than the same week one year ago.

"The increase in purchase activity was led by a 17.2% increase in FHA applications, while conventional purchase applications also increased by 3.6%," said Jay Brinkmann, MBA’s chief economist.

"This is the second straight weekly increase in purchase applications and the highest Purchase Index level since the expiration of the homebuyer tax credit program.

The refinance share of mortgage activity decreased to 78.9% of total applications from 80.7% the previous week.

The average interest rate for 30-year fixed-rate mortgages decreased to 4.25% from 4.38%. The 30-year contract rate is the lowest recorded in the survey. 

The average interest rate for 15-year fixed-rate mortgages decreased to 3.73% from 3.77%.