WASHINGTON, Oct. 9 (Xinhua) -- Mortgage applications increased in the United States as mortgage rates dropped, according to a report from Mortgage Bankers Association (MBA) on Wednesday.
For the week ending Oct. 4, MBA's market composite index, a measure of mortgage loan application volume, increased 5.2 percent from a week earlier.
"U.S. Treasury rates moved sharply lower last week, as data showing weakness in the services sector was a sign that slowing economic growth is not confined to the manufacturing sector," said Joel Kan, associate vice president of economic and industry forecasting of MBA.
"This in turn caused a flight to safety by investors, resulting in mortgage rates dropping across the board, with the 30-year fixed rate decreasing nine basis points to 3.9 percent, the lowest level in a month," said Kan.
Besides, the refinance index, which measures the activity to replace higher rate mortgages with lower rate mortgages, increased 10 percent from the previous week, according to MBA.
"As seen a few times this year, the large drop in rates caused another surge in refinance applications," said Kan. "The refinance index increased 10 percent to its highest level since late August, with both conventional and government refinances experiencing an upswing."
However, MBA's purchase index decreased from the previous week. After removing the influences of predictable seasonal patterns, the seasonally adjusted purchase index decreased 1 percent from a week earlier, according to MBA.
"Purchase activity was muted, declining almost 1 percent, but was still 10 percent higher than a year ago. Despite low rates, the cloudier economic outlook and ongoing market uncertainty may be keeping some potential homebuyers away from the market this fall," Kan added.
