Mortgage Rates Fall Again

Mortgage applications surged to their highest level since last spring, as 30-year interest rates remained below 5 percent for the third consecutive week, according to the weekly survey by the Mortgage Bankers Association.

Applications jumped a seasonally adjusted 16.4 percent from the previous week, driven by an 18.2 percent increase in refinance applications, which hit their highest level since mid-May. Mortgage applications for home purchases were up by 13.2 percent for the week ending Oct. 2, to their highest level since January.

The average interest rate on 30-year fixed rate mortgages fell slightly, to 4.89 percent, down from 4.94 percent, with an average of 1.13 points paid, for mortgages with an 80 percent loan-to-value. It's the lowest the rate has been since mid-May, toward the tail end of last spring's refinancing frenzy.

The current 30-year rate is less than three-tenths of a percentage point above the survey's all-time low of 4.61, which was reported in late March. The MBA has been conducting the weekly survey since 1990.

Despite the current run of sub- 5 percent rates, mortgage application activity has been uneven in recent weeks. Both refinance and purchase applications fell the previous week, despite another small drop in interest rates, on the heels of another big jump in applications two weeks ago.

Mortgage refinancings made up just under two-thirds of all mortgage applications for the week, up slightly from the week before.

It's generally expected that interest in purchase applications will remain strong for a least another month, as buyers rush to beat the Nov. 30 deadline for closing on home purchases to qualify for the $8,000 first-time homebuyer tax credit. Though there have been some indications that Congress may extend the credit, perhaps in modified form, that is by no means certain.

Interest rates on 15-year fixed rate mortgages also fell slightly, to 4.32 percent, down from 4.34 percent. Conversely, the rate on one-year adjustable rate mortgages jumped to 6.56 percent, up from 6.40 the week before. Adjustable rate mortgages accounted for 6.1 percent of all mortgage applications, down from 6.2 percent the week before.