Another roller-coaster interest rate ride, combined with anxiety over new mortgage regulations, caused borrowers to rush to their lenders last week.
Total mortgage application volume surged 25.5 percent on a seasonally adjusted basis for the week ending October 2nd compared to the previous week, according to the Mortgage Bankers Association (MBA).
Both applications to refinance and to purchase a home were almost equally juiced. Refinance applications rose 24 percent, seasonally adjusted, and purchase applications were up by 27 percent. Purchase applications, which are usually less rate-sensitive week-to-week, are now 49 percent higher than one year ago, an astonishing jump given that the latest reads on home sales show the market appears to be weakening. They are now at the highest level in five years.
“The number of applications for purchase and refinance mortgages soared last week due both to renewed rate volatility and as many applications were filed prior to the TILA-RESPA regulatory change,” said Lynn Fisher, the MBA’s vice president of research and economics.
The change is part of a move by federal regulators to further protect borrowers by forcing lenders to disclose all details of a loan at least three days prior to closing; it went into effect October 3rd.
The average loan size of applications in the weekly survey increased by 6.9 percent, driven by a 12.1 percent increase in the average size of refinances.