Although fixed mortgage rates continue to hover near all-time lows, loan application activity declined slightly in the week ending October 5.
During the week, mortgage records show the overall Market Composite Index edged 1.2 percent lower, according to the Mortgage Bankers Association. This was caused, in part, by a 2 percent drop in refinancing. However, the share of refinances accounted for 83 percent of activity, which was consistent with the previous week.
"Refinance applications declined somewhat last week although volume is still near three-year highs, and purchase applications increased to the highest level since June, with both conventional and government volumes increasing," said MBA vice president of research and economics Mike Fratantoni.
Meanwhile, purchase activity rose 2 percent from a week earlier, the report said. Although, these types of applications could increase in the near future, as many borrowers expect mortgage rates to increase in the next 12 months.
Additionally, the financial safety and soundness of consumers continues to improve. With a greater number of prospective borrowers finding their financial footing, they could become more confident in making major investments, such as purchasing property.