Purchase activity hitting its highest point since April led to heightened mortgage volume in a shortened holiday week, according to the Mortgage Bankers Association.

The Market Composite Index, a measure of mortgage-application volume based on surveys of MBA members, came in 0.3% higher week over week for the period ending Sept. 10 on a seasonally adjusted basis. The unadjusted index fell 10% during the abridged Labor Day week. Compared to the levels of one year ago, seasonally adjusted volume declined 6.5%.

Increased home buying helped lead to the overall uptick, with the seasonally adjusted Purchase Index jumping 8% from a week earlier, thanks to elevated volume among both conventional and government-backed loans. On an unadjusted basis, the Purchase Index dropped 5%.

“Compared to the same week last September, which was right in the middle of a significant upswing in home purchases, applications were down 11% — the smallest year-over-year decline in 14 weeks,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting, in a press release.

A downturn in refinances offset purchase gains, as that index dropped 3% from the prior week, its slowest pace since July. Refinance applications were also 3% lower from their numbers one year ago.

The stagnated pace also led refinances to take in its lowest share of overall volume since July — 64.9%. A week earlier, the percentage of refinances amounted to 66.8% of activity.

Adjustable-rate mortgages accounted for 3.3% of applications, up from 2.5% the previous week.

Loan sizes pick up
Average mortgage amounts surged for the week, as the mean size of applications came in at $338,500, up 2.8% from $329,200 the week prior.

“The average loan size for a purchase application rose to $396,800. The very competitive purchase market continues to put upward pressure on sales prices,” Kan said. The average was up 1.8% from $389,800 reported the prior period, as affordability remains an ongoing concern for home buyers.

While refinance volume slowed, the average amount of refinance applications climbed to $307,000 on a weekly basis from $299,200, a 2.6% increase.

Shares of government-sponsored loans slip
Applications backed by the Federal Housing Administration accounted for a 9.9% share of all loan activity, down from 10.9% a week earlier. Veterans Affairs-sponsored loans edged down to 10.2% of activity from 10.4% the previous week, while mortgages taken through the U.S. Department of Agriculture equaled 0.4% of applications, down from 0.5%.

30-year rates remain stable

• The contract interest rate of 30-year fixed-rate mortgages with conforming loan balances of $548,250 or less averaged 3.03% for the third consecutive week. 

• The average contract interest rate of 30-year fixed-rate jumbo loans with balances greater than $548,250 dropped one basis point to 3.13% from 3.14% one week earlier.

• The average contract interest rate of FHA-backed 30-year mortgages slid to 3.04% compared to 3.07% the prior week. 

• The contract interest rate for 15-year mortgages decreased to 2.34%, three basis points lower from 2.37% the previous week. 

• The average contract interest rate for 5/1 adjustable-rate mortgages headed upward, rising 12 basis points to 2.68% from the prior week’s 2.56%.