Mortgage applications jumped dramatically for the week ending Sept. 12, up 7.9% from the week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending Sept. 12, 2014. 

This erases the 7.2% drop the week ending Sept. 5, with twice as much of a gain among refinancings as purchases.

“Application volume rebounded coming out of the Labor Day holiday, even as rates increased to their highest level in the last few months,” said Mike Fratantoni, MBA’s Chief Economist.  “Given the volatility in activity around the long weekend, it can be helpful to look at the change over a two week span: refinance applications are down 1.4% while purchase applications are up 2.1%.  Purchase volume continues to track almost 10% behind last year’s levels.”

The Market Composite Index, a measure of mortgage loan application volume, increased 7.9% on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 19% compared with the previous week. 

The Refinance Index increased 10% from the previous week.  The seasonally adjusted Purchase Index increased 5% from one week earlier.  The unadjusted Purchase Index increased 14% compared with the previous week and was 10% lower than the same week one year ago.

The refinance share of mortgage activity increased to 57% of total applications, the highest level since February 2014, from 55% the previous week.  The adjustable-rate mortgage share of activity increased to 7.6% of total applications.

“A big part of last week’s jump is lenders having five full days or more dedicated to helping their clients following a Labor Day lull. Aside from originations, the bigger story is that mortgage rates rose very quickly last week, snapping back up to early July levels,” Quicken Loans vice president Bill Banfield said.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.36%, the highest level since June 2014, from 4.27%, with points decreasing to 0.20 from  0.25 (including the origination fee) for 80% loan-to-value ratio loans.  The effective rate increased from last week. 

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to 4.24% from 4.15%, with points decreasing to 0.16 from 0.23 (including the origination fee) for 80% LTV loans.  The effective rate increased from last week. 

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 4.03% from 3.97%, with points decreasing to 0.05 from 0.08 (including the origination fee) for 80% LTV loans.  The effective rate increased from last week. 

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.56% from 3.44%, with points decreasing to 0.25 from 0.28 (including the origination fee) for 80% LTV loans.  The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs increased to 3.19% from 3.12%, with points decreasing to 0.29 from 0.45 (including the origination fee) for 80% LTV loans.  The effective rate increased from last week.