A fourth rate increase in five weeks slows applications
Mortgage applications held steady last week, declining just 0.1%, as mortgage rates climbed for the fourth time in five weeks.
According to the Mortgage Bankers Association (MBA), bond market volatility ahead of the upcoming presidential election and the Federal Open Market Committee (FOMC) meeting continues to exert pressure on rates, pushing the 30-year fixed rate up to 6.73% – its highest level since July.
"Mortgage applications were essentially flat last week as rates increased for the fourth time in five weeks," said Joel Kan, MBA’s vice president and deputy chief economist. He added that “overall applications have declined 27%, driven by a pullback in refinances," with government-backed refinances seeing a notable 12% decline over the past week.
Refinance applications fell by 6% week-over-week, though it remained 84% higher than the same time last year. Refinances now make up just 43.1% of mortgage applications, down from 45.7% the previous week.
Meanwhile, the purchase market saw a slight boost, with the seasonally adjusted purchase applications up by 5%, marking a 10% increase compared to last year.
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As fixed-rate options continue to rise, the share of adjustable-rate mortgage (ARM) applications increased to 6.4% of total activity. In government-backed loans, FHA applications dropped to 16.4% of total applications, down from 16.9%, and VA loan applications decreased to 14.6% from 15.8% the previous week. USDA applications held steady at 0.4%.
“Purchase applications increased compared to a holiday-shortened week and were 10% higher than a year ago,” Kan noted. Although recent application activity has been muted, Kan expressed optimism that demand from younger homebuyers will continue to support purchase growth as inventory gradually loosens.
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