Mortgage volumes saw their steepest decline since June last week, when rising interest rates and high house prices slowed borrowing, according to the Mortgage Bankers Association.
The Market Composite Index, a measure of loan applications based on a survey among association members, fell by a seasonally adjusted 6.9% in the weekly period up to October 1st.The seasonally adjusted activity was also 15% below the level of the same week in 2020 Slowed buying and especially refinancing contributed to the week's decline and industry forecasts, according to Joel Kan, associate vice president of economics at MBA.
"Higher interest rates reduce the incentive for borrowers to refinance as all types of loans have declined," Kan said in a press release.
The refinancing index slumped 10% compared to the previous week – and recorded its lowest volume in three months – and was 16% below the values a year ago. The share of refinancing in the total loan volume also shrank from 66.4% a week earlier to 64.5%.
The purchasing index also lost seasonally adjusted and unadjusted by 2% compared to the previous week, with the unadjusted volume falling by 13% compared to the same weekly period a year ago. Despite a 1% increase in government loan purchases last week, the increase failed to offset the decline in conventional applications, according to the MBA.
It also failed to lower the average purchase credit size, which stayed nearly the same week-on-week at $ 410,500 compared to $ 410,300. "With home appreciation and sales prices remaining very high, higher-balance conventional loan applications still dominate the mix of activities," Kan said.
Refinance amounts declined, however, with the average size dropping 3.8% from $ 311,200 a week earlier to $ 299,400. The average size of all applications averaged $ 338,900, down 1.6% from $ 344,500.
The percentage of mortgage loans secured by the Federal Housing Administration rose slightly to 10.5% from 10.4% the previous week. Veterans Affairs sponsored applications and US Department of Agriculture secured loans also increased their share of the total by 0.1% each, with VA mortgages increasing to 10.3% from 10.2% in the previous weekly period. USDA-covered loans accounted for 0.5% of all claims, down from 0.4%.
The percentage of variable rate mortgage loan applications in relation to total activity remained unchanged from week to week, accounting for 3.4% of activity.
Fixed rates are rising again
For the second straight week, average fixed rates rose across all types, with the 30-year compliant balance rate of $ 548,250, its highest since July – 3.14%. The rate was four basis points above the 3.1% of the previous week
The 30-year jumbo rate for loans over $ 548,250 averaged 3.2%, up six basis points from 3.14% a week earlier.
The 30-year fixed rate average on FHA-backed loans rose three basis points to 3.12% from 3.09% the previous week.
The average contract rate on 15-year fixed-rate mortgages rose to 2.45%, up from 2.43% in the previous one-week period.
While the fixed rate averages all rose higher, the 5/1 variable rate mortgage saw a decrease from 2.77% a week earlier to 2.54%.