Meanwhile, purchase activity growth spurs uptick in total applications
Refinance activity has continued to wind down due to increasing interest rates, with refi applications decreasing for the fifth week in a row, according to the Mortgage Bankers Association.
Total mortgage application volume inched up 0.3% for the week ending October 22 – driven by a 4% increase in purchase applications. Refinance applications, on the other hand, dropped 2% week over week and was 26% lower than the same period a year ago.
“Mortgage rates increased again last week, as the 30-year fixed rate reached 3.30% and the 15-year fixed rate rose to 2.59% – the highest for both in eight months. Higher rates continue to reduce borrowers’ incentive to refinance,” said Joel Kan, AVP of economic and industry forecasting at MBA. “Purchase applications picked up slightly, and the average loan size rose to its highest level in three weeks, as growth in the higher price segments continues to dominate purchase activity.”
In September, both new and existing-home sales surged by 14% and 7%, respectively. However, Kan noted that rapidly rising home prices were still constraining sales in several markets, particularly for first-time home buyers. He said that sky-high prices were the culprit behind the declining share of homebuying activity.
Read more: New home sales figures for September revealed
MBA reported a nine-basis-point drop in the refinance share of mortgage activity, which decreased to 62.2% of total applications. The adjustable-rate mortgage share of activity also edged down to 3.1% of total applications.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased seven basis points to 3.30%, while the average contract interest rate for mortgages with jumbo loan balances (greater than $548,250) increased eight basis points to 3.34% from the previous week.
