Mortgage applications down 3.5% on fewer rate swings

Wide weekly swings in mortgage applications seem to have calmed down, now that new lender regulations have been in place for nearly a month.

Total application volume decreased 3.5 percent on a seasonally adjusted basis for the week that ended Friday versus the previous week, according to the Mortgage Bankers Association.

"Between the recent TILA-RESPA regulatory change and the Columbus Day holiday, mortgage application volume has been more volatile than normal. However, that appears to be settling down somewhat," said Michael Fratantoni, chief economist for the MBA.

Mortgage Application
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Refinance volume fell 4 percent for the week, seasonally adjusted, and applications to purchase a home fell 3 percent. Both purchase and refinance applications were running just below the year-to-date average levels last week, but purchase volume was 23 percent higher than the same week last year.

Mortgage rates have moved slightly higher, which would account for the drop in refinance volume. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 3.98 percent from 3.95 percent, with points increasing to 0.44 from 0.43 (including the origination fee) for 80 percent loan-to-value ratio loans.

The Federal Reserve is not expected to announce any change in interest rates following its two-day meeting Wednesday. Even when the Fed finally does make a move, it is entirely possible mortgage rates will not follow in step.

"It's really that broader, global economic trend that will do most to dictate longer-term rates like mortgages. After all, that's the entire reason rates are as low as they are despite the ever-increasing sense of the Fed's rate hike intentions," wrote Matthew Graham, chief operating officer of Mortgage News Daily.