Purchase Apps Surge

Purchase money applications surged 11.1% from the previous week — bringing the Purchase Index to 404.3, according to the Mortgage Bankers Association of America’s (MBAs) most recent Weekly Mortgage Applications Survey. A year ago, the index measured 369.5.

Meanwhile, the Refinance Index nudged up 0.3% from the prior week to 2319.8, according to the survey. Last year at this time, the measure of refinance mortgage applications stood at 4875.1. The recent share of refinance mortgage applications fell slightly to 51.1%.

The surge in purchase applications helped boost the Market Composite Index up 5.5% to 685.2 — the highest it’s been in weeks — according to MBAs survey. At 1030.5, the index was much stronger a year ago.

The adjustable-rate mortgage (ARM) share of activity dipped about one percent to 25.4%, reported the MBA. One-year Treasury-indexed ARMs averaged 3.73%, almost unchanged from the prior week, according to Freddie Mac’s most recent Primary Mortgage Market Survey. The Cost of Funds Index, or COFI, which competes with the one-year Treasury-index for ARM loans, averaged 1.923% in September, falling 2 BPS from the prior month, reported the Federal Home Loan Bank of San Francisco.

As for long-term fixed rates, the 30-year averaged 5.98%, up 4 basis points (BPS) from the previous week, Freddie said, while a year ago it averaged 6.11%.

The average 15-year fixed rate mortgage reportedly increased 5 BPS to 5.31%.

According to a Bankrate.com report, “the small rise in mortgage rates was somewhat of a surprise,” considering last week’s news of the biggest quarterly growth in the economy — 7.2% — since the 1980s. The report indicated that employment statistics for the month of October due out Friday, may better direct where rates will head.

Meanwhile, 42% of the website’s panel of mortgage industry experts believe rates will rise, 33% predict rates will remain about the same (plus or minus 2 BPS) and 25% foresee a downturn.

Freddie’s chief economist Frank Nothaft said early indicators of an increase in the manufacturing and service industries for October signal economic improvement, and as a result employment growth “has begun to rebound from lackluster levels of earlier this year.”

“All of these positives bode well for the housing industry and should partially offset slowly rising mortgage rates next year,” added Nothaft.

In late afternoon trading Thursday, the 10-year Treasury-note was trading at 98 21/32, down $0.50 from Wednesday’s close. The yield was 4.41%, up from 4.35% Wednesday. The 10-year yield was reported at 4.29% last week.