Mortgage applications increased 11.8% from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending Oct. 16, 2015. This week’s results include an adjustment to account for the Columbus Day holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 11.8% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 1% compared with the previous week. The Refinance Index increased 9% from the previous week. The seasonally adjusted Purchase Index increased 16% from one week earlier. The unadjusted Purchase Index increased 5% compared with the previous week and was 9% higher than the same week one year ago.

This good news comes on the heels of MBA's more sobering forecast for 2016, where the association said it expects a 10% increase in purchase mortgage originations next year compared to 2015.

“On an adjusted basis, application volume increased last week, led by a sharp rebound in government volume. We expect that application volume will remain volatile over the next few weeks as the industry continues to implement TILA-RESPA integrated disclosures,” said Mike Fratantoni, MBA’s Chief Economist.

The refinance share of mortgage activity decreased to 59.5% of total applications from 61.2% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.9% of total applications.

The FHA share of total applications increased to 14.3% from 12.6% the week prior. The VA share of total applications increased to 12.7% from 11.5% the week prior. The USDA share of total applications increased to 0.6% from 0.5% the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 3.95%, the lowest level since May 2015, from 3.99%, with points decreasing to 0.43 from 0.53 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 3.87%, the lowest level since April 2015, from 3.89%, with points decreasing to 0.29 from 0.41 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.78%, the lowest level since May 2015, from 3.82%, with points remaining unchanged at 0.39 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages remained unchanged at 3.20%, with points decreasing to 0.34 from 0.39 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 2.94%, the lowest level since May 2015, from 3.00%, with points decreasing to 0.35 from 0.46 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.