Slowdown reflects a cautious homebuying market
Mortgage applications hit their lowest point since July, as both purchase and refinance activity saw declines.
The Mortgage Bankers Association (MBA) reported a seasonally adjusted 6.7% decrease in overall application volume for the week ending October 18, reflecting a shift in mortgage activity from past weeks. Unadjusted applications were down 7% from the previous week.
Joel Kan, MBA’s vice president and deputy chief economist, noted that the 30-year fixed rate, which remained unchanged at 6.52%, as prospective homebuyers continued to hold out for further rate cuts.
“Application activity decreased to its lowest level since July, as both purchase and refinance applications saw declines,” Kan said in the report.
“For-sale inventory has started to loosen, and home-price growth has eased in some markets, providing more options for buyers in combination with these lower rates.”
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Purchase applications decreased by 5% on both a seasonally adjusted and unadjusted basis compared to the previous week. However, MBA’s unadjusted purchase index was still 3% higher than the same week one year ago.
Kan noted that purchase applications have been relatively strong, running ahead of last year’s pace for the past five weeks.
“Purchase applications continued to run stronger than last year’s pace for the fifth consecutive week. Even though rates have been on a recent upswing, they are over a full percentage point lower than a year ago, which has kept some homebuyers in the market,” he said.
Refinance activity experienced a larger decline, with the refinance index down 8% from the previous week. Despite the decrease, the refinance index remained 90% higher than the same week in 2023, reflecting ongoing refinancing interest due to rates still being lower than last year’s elevated levels.
Other aspects of mortgage activity showed notable shifts. The refinance share of total mortgage applications slipped to 45.7%, down from 46.5% the previous week. Adjustable-rate mortgages (ARMs) accounted for 6.1% of total applications, while FHA loans saw an uptick to 16.9%. VA loan applications dropped slightly to 15.8%, while USDA loans held steady at 0.4%.
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