Declining interest rates are invigorating mortgage activity, with purchase applications for home mortgages rising a seasonally adjusted 11 percent in the September 8 week after adjustment for the Labor Day holiday, while applications for refinancing, which are not seasonally adjusted, rose 9.0 percent. Unadjusted, the Purchase Index decreased 13 percent from the prior week and was 7 percent above the level a year ago. The refinance share of mortgage activity increased by 0.1 percentage points to 51.0 percent, the highest level since January. The average interest rate on 30-year fixed-rate conforming mortgages ($424,100 or less) fell 3 basis points to 4.03 percent, the lowest rate since the week of the Presidential elections in November 2016, when mortgage rates embarked on a steep climb higher. Current rates are precisely midway between last year July's 3-year lows at 3.60 percent and the 4.46 percent highs set in March this year.
The second consecutive weekly increase in purchase applications after 3 weeks of declines is a sharp one, and widens the year-on-year gain by 2 percentage points to bring it back up close to the 8 percent plus gains seen earlier in the year. The MBA report suggests that cheaper financing could still energize the housing market after a disappointing spring and summer.