"Regardless of the seasonal volatility in the applications numbers, the bigger issues remain. Rates had been stagnant at their lowest levels of the year until moving higher fairly quickly in September, in part based on speculation that today's Federal Reserve announcement would accelerate the rate hike timeline," said Matthew Graham of Mortgage News Daily. "While the Fed's policy rate doesn't directly affect mortgage rates, the indirect effect of such a shift could mean that rates continue moving higher, and that would only be bad for refinance demand."
The refinance share of mortgage activity increased to 57 percent of total applications, the highest level since February, while the adjustable-rate mortgage (ARM) share of activity increased to 7.6 percent.
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A snapshot of mortgage volume by Guaranteed Rate, a retail mortgage lender, found that ARMs took off dramatically in the second quarter compared with a year ago, rising from 9 to 16 percent of total loan volume.
"ARMs' rapid rise in the share of the total volume indicates that home buyers are feeling more comfortable with this type of loan product after shying away from it in the wake of the financial crisis," according to the report.