Unlike during much of the summer, application volume last week was fueled more by buyers than refinancers. Mortgage applications to purchase a home jumped 9 percent from the previous week. Purchase volume is down nearly 19 percent in the past four weeks, but August is not usually a strong month for homebuying. The jump last week may signal a stronger fall market ahead. Purchase volume is still just 8 percent higher than the same week a year ago, down from double digit annual increases early this year.
"The purchase market remains supported by an improving U.S. labor market. Newly released data from the U.S. Census this week indicate that the median income increased by 5.2 percent last year, the highest rate of increase since 2007. Other recent but less comprehensive measures show wage growth continuing to strengthen in 2016," said Lynn Fisher, MBA's vice president of research and economics.
A small drop in mortgage interest rates at the beginning of last week may have been behind the 2 percent weekly gain in applications to refinance. Refinance volume has been strong all summer, up nearly 43 percent last week from a year ago, with rates sitting near all-time lows.
The average contract interest rate on the popular 30-year fixed conforming loan ($417,000 or less) decreased to 3.67 percent from 3.68 percent, with points decreasing to 0.36 from 0.37 (including the origination fee) for 80 percent loan-to-value ratio loans.