The Mortgage Bankers Association's (MBA) Market Composite Index (MCI) increased 17% on a seasonally adjusted basis for the week ended Sept. 4, driven by a notable increase in refinance applications as rates fell.

In fact, the Refinance Index increased by 22.5% over the previous week, a jump that was its biggest since mid-March, MBA said.

On an unadjusted basis, the MCI increased 15.8% compared with the previous week and 64.5% compared with the same week one year earlier.

The MCI is calculated from the MBA's Weekly Mortgage Applications Survey. There is also strong home purchase mortgage application activity, as the Purchase Index increased by 9.5% over the previous week.

This is the largest gain in this component since early April and it puts the Purchase Index at its highest level since the first week of January.

The share of refinancing applications increased to 59.8% of total applications, up from 56.5% the previous week. The share of adjustable-rate mortgage applications for the week was 5.8%, up from 5.6% one week before.

The average contract interest rate for 30-year fixed-rate mortgages fell to 5.02% from 5.15%, with points increasing to 1.23 from 1.09 (including the origination fee) for loans with an 80% percent loan-to-value ratio, according to the association.

The average contract interest rate for 15-year FRMs decreased by 12 basis points to 4.45%, while for one-year adjustable rate loans, it decreased by 2 basis points to 6.69%.

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