The seasonally adjusted purchase index dropped 9.1% from the prior week as potential homebuyers were cautious to make big purchases amid economic uncertainty. "Unprecedented volatility in the stock market last week amid additional signs that the economy has slowed led to further drops in mortgage rates, with the 15-year rate reaching a new low for the MBA survey," said Mike Fratantoni, MBA's vice president of research and economics. "Purchase application activity fell sharply over the previous week, likely the result of potential homebuyers hesitant to purchase in this highly volatile and uncertain environment."
A total of 78.8% of all loan applications last week were for refinancing existing mortgages, up from 75.6% in the prior week. It was the highest the refinance share has been since November 2010 as existing homeowners looked to take advantage of lower mortgage rates. The average rate on a 30-year fixed mortgage decreased to 4.32% last week, down from 4.37% in the prior week. The 30-year fixed contract rate has decreased for three straight weeks and is at a new low for this year, the MBA said.