The index of mortgage applications compiled by the Mortgage Bankers Association rose 1.8% last week. So far in September mortgage applications are 5.9% ahead of August.

Last week's rise in applications was spurred by another sharp gain in applications to refinance which rose 4.1% and for September are 9.8% ahead of August.

The effective interest rate on a conventional 30-year mortgage ticked down to 5.92% from 5.95% the prior week and from 6.04% averaged in August. In May, 30-year financing averaged 6.53%. The effective rate on a 15-year mortgage fell to 5.35%, down from 5.97% averaged in May.

Purchase applications ticked up 0.2% after a 4.3% decline the prior week. Purchase applications in September are 3.2% higher than in August. During the last ten years there has been a 60% correlation between the y/y change in purchase applications and the change in new plus existing home sales.

The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site here.