The figures come amid anxiety that the new disclosure rules would delay or even scuttle some loan applications.
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"We expect that application volume will remain volatile over the next few weeks as the industry continues to implement TILA-RESPA integrated disclosures," said Mike Fratantoni, the MBA's chief economist, referring to the the Truth in Lending Act and the Real Estate Settlement Procedures Act of 1974.
Refinance volume increased 9 percent from the previous week on a seasonally adjusted basis. Purchase applications increased 16 percent from a week earlier and are now 9 percent higher than the same week one year ago. A drop in interest rates may have helped juice the volume.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 3.95 percent, the lowest level since May, from 3.99 percent, with points decreasing to 0.43 from 0.53 (including the origination fee) for 80 percent loan-to-value ratio loans.
Another driver of volume was in the government loan categories.
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FHA, VA and Rural Home Loans saw big increases, although there appears to be no clear reason why. These loans do have the lowest down payment requirements, so the surge could be a signal that first-time buyers, who are historically more plentiful in the fall, are finally returning to the housing market.
The Mortgage Bankers Association, which is holding its annual convention this week, released its latest projections for mortgage originations in 2016. It expects a steady increase in purchase applications but a large drop in refinances, likely due to the expectation for higher interest rates.
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"Despite bumps in the road from energy and export sectors, the job market is near full employment, with other measures of employment underutilization continuing to improve," Fratantoni said. "We are forecasting that strong household formation, improving wages and a more liquid housing market will drive home sales and purchase originations in the coming years."
The association predicts $905 billion in purchase mortgage originations during 2016, a 10 percent increase from 2015. It expects that refinance originations will decrease by one-third, resulting in refinance mortgage originations of $415 billion. On net, mortgage originations would therefore decrease to $1.32 trillion in 2016 from $1.45 trillion in 2015.
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