Despite mortgage rates at their lowest since the 1940s, "potential borrowers largely remained on the sidelines," said Mike Fratantoni, Mortgage Banker's Association's vice president of research and economics.
For the week ending September 30, the Purchase Index slipped 0.8% to ~175. Meanwhile, the Refi Index fell 5.2% to ~4020 and as a percent of total applications, refi share declined to 79.1% from 79.7%. Overall, application activity was down 4.3%.
Of note, however, said Fratantoni is "many refinance borrowers are opting to deleverage by moving to a 15-year term, with this product accounting for 27.0 percent of refinance volume last week." The MBA said that in August the 15-year refi share was at its highest point --31.0%-- since the survey was re-benchmarked in January 2011; 50.7% of refi applications were for 30-year fixed loans.
Mortgage application activity lowered despite further declines in mortgage rates last week. The MBA reported the contract interest rate for 30-year fixed mortgages with conforming loan balances averaged 4.18%, down six basis points from the prior week; jumbo loans decreased to 4.49% from 4.53%, while FHA loan rates slipped one basis point to 4.05%.
At this time and despite new record lows in mortgage rates, the outlook for speeds in October and November are rather unimpressive at increases of less than 5%. For the month of September, 30-year fixed mortgage rates according to Freddie Mac's weekly survey averaged 4.08%, down 18 basis points from August's average. Meanwhile, the MBA's Refi Index is 4% lower than the previous month.