Rate volatility dampens demand for purchases and refinances
Mortgage demand fell for the sixth straight week, with applications dropping by 10.8% as volatility in Treasury yields continued to drive mortgage rates higher, according to data from the Mortgage Bankers Association (MBA).
MBA’s market composite index, which tracks mortgage application volume, fell 0.8% on an adjusted basis and down 112% on an unadjusted basis for the week ending November 1. The report also showed that demand for both purchase and refinance applications has been impacted by rate increases.
The average rate on a 30-year fixed mortgage with conforming loan balances rose to 6.81%, the highest since July, further limiting activity in both the purchase and refinance markets.
“Ten-year Treasury rates remain volatile and continue to put upward pressure on mortgage rates,” said Joel Kan, MBA’s vice president and deputy chief economist. “Applications decreased for the sixth consecutive week, with purchase activity falling to its lowest level since mid-August and refinance activity declining to the lowest level since May.”
Purchase applications declined 5% on a seasonally adjusted basis from the prior week and were down 7% on an unadjusted basis. Refinance applications dropped more sharply, falling 19% from the previous week, though they remain nearly 50% higher than a year ago, reflecting higher refinancing activity earlier this year.
“The average loan size on a refinance application dropped below $300,000, as borrowers with larger loans tend to be more sensitive to any given changes in mortgage rates,” Kan noted.
Read next: US election doesn't curb mortgage activity – or does it?
The refinance share of total mortgage activity dropped to 39.9% from 43.1% the previous week as rising rates make refinancing less appealing. Adjustable-rate mortgage (ARM) applications increased slightly, with ARM loans now accounting for 7% of all mortgage applications.
FHA loan applications decreased to 15.5% of total applications from 16.4% the previous week, while VA loans also saw a decline, from 14.6% to 12.5%. USDA loans edged up to 0.5% from 0.4%.
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
