After posting a large drop the previous week, mortgage applications reversed course in the latest week, as both applications for home purchases and refinancing surged, the Mortgage Bankers Association reported Wednesday.

The MBA’s seasonally adjusted index of mortgage application activity showed a 7.9 percent spike in applications for the week ending Sept. 12. This follows a 7.2 percent drop the previous week.

Broken out, for the week ending Sept. 12, mortgage applications for refinancing rose 10.3 percent, while applications for home purchases, viewed as a leading indicator of future home sales, ticked up 4.8 percent during the week, the MBA reports.

"Application volume rebounded coming out of the Labor Day holiday, even as rates increased to their highest level in the last few months," says Mike Fratantoni, the MBA's chief economist.

The 30-year fixed-rate mortgage averaged 4.36 percent during the week, marking its highest average since June.

Source: Reuters