Mortgage applications shot back up this past week as the market corrected itself in the wake of the Labor Day weekend, analysts said Wednesday morning.
Despite seasonal factors having an impact on applications, other factors remain. The market overall continues to readjust as interest rates fluctuate and analysts wait to see whether the Federal Reserve will slow down its acquisition of mortgage-backed securities and Treasurys. An update from the latest Federal Open Market Committee Meeting is expected this afternoon.
Looking at the data, mortgage applications increased 11.2% from a week earlier, the MBA said. Refinance activity also came back, growing 18% from the previous week, while the purchase index rose 3%.
Collectively, the refinance share of mortgage activity inched back up to 61% of total applications this week, up from 57% a week earlier.
Mortgage analysts are attributing the rebound in refinance applications to a recent drop in mortgage rates and a natural pick-up resulting from the end of a holiday.
"However, refinance volume remains almost 70% below the peak in early May," explained MBA vice president of research and economics Mike Fratantoni.
He added, "The decline and rebound were also caused to some extent by the slowdown around the Labor Day holiday. Although we included an adjustment for the holiday, it did not precisely capture this slowdown."
Handling such a volatile market, it becomes difficult to discern what happens week-over-week in the mortgage space, explained Quicken Loans chief economist Bob Walters.
"The week before, you had people on holiday, so when consumers reengaged back into their every day life a lot more people were making more decisions on their homes," Walters noted.
He added, "Additionally, the industry had a ton of people out on vacation, which also effects such a volatile series."
On a similar note, Ellie Mae noted that purchase loans continued to gain share in August, climbing 4% to represent 57% of all loans analyzed by Ellie.
"This was the highest percentage of purchase loans since we began tracking data in August 2011," explained Ellie Mae president and chief operating officer Jonathan Corr.
Additionally, HARP-related high loan-to-value refinances — of 95% LTV or more — continued to grow, moving up from 11.1% in July to 13.4% in August.
In August, the average FICO score for closed loans dropped to 734, the lowest level since Ellie Mae began tracking this data in August 2011, Corr noted.
The average 30-year note rate jumped to 4.62% in August, up from 4.36% in July, and nearly a whole percentage point from a year ago, Ellie Mae reported.