The Mortgage Bankers Association (MBA) reported mortgage application activity rose 11.1% in the week ending Sept. 7. Adjusted for the Labor Day holiday, the Refinance Index surged 12% to ~4723, while the Purchase Index gained 8% to 193.

The MBA cautioned, however, that the holiday adjusted numbers could overstate refi applications as "some lenders who rely primarily on the Internet/consumer direct channel for originations saw little if any decline in applications for Labor Day as compared with the drops for lenders relying on retail offices, perhaps because borrowers had additional time over the Labor Day weekend to complete online refinance applications." On an unadjusted basis, the Refi Index declined 12% and the Purchase Index was down 15%.

At the most, a modest gain was anticipated as mortgage rates were lower after increasing in mid-August. The contract interest rate for 30-year fixed conforming loans averaged 3.75%, down three basis points from the prior week; FHA rates set a new historical low at 3.50% from 3.54% previously.

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