Mortgage Purchase Applications Drop, Refinancing Rises

In contrasting signals, the purchase index fell 4.0 percent in the October 11 week while the year-on-year rate, which is subject to less volatility, rose 2 tenths to a very favorable plus 12.0 percent. Low rates are a fundamental positive for underlying home sales, averaging 3.92 percent for conventional 30-year loans and little changed versus 3.90 percent in the prior week. Low rates also boost refinancing activity where the index rose a weekly 4.0 percent. Watch for the housing market index later this morning and the latest indications from the nation's home builders.