30-year fixed mortgage rate hits staggering 7.7%, dampening homebuying activities
Mortgage applications plummeted to their lowest level in 28 years after weeks of consecutive increases in mortgage rates.
The Mortgage Bankers Association (MBA) reported today that its Market Composite Index – a measure of loan application volume – fell 6.9% in the week ending October 13, marking the lowest level since 1995.
This decline is attributed to the surge in the 30-year fixed mortgage rate, which has been on an upward trajectory for six consecutive weeks, reaching 7.7% – a peak not seen since November 2000.
MBA's data also revealed a 10% decrease in the refinance index from the previous week and a 12% decline compared to last year. The seasonally adjusted purchase index fell by 6%, while the unadjusted version saw a 5% reduction, representing a 21% year-over-year decline.
MBA deputy chief economist Joel Kan highlighted the impact of increased rates on potential homebuyers.
"Purchase applications were 21% lower than the same week last year, as homebuying activity continues to pull back given reduced purchasing power from higher rates and the ongoing lack of available inventory," Kan said.
Amidst these challenges, some borrowers are exploring alternative solutions to mitigate their monthly expenses, leading to the ARM share rising to 9.3%, the highest in nearly a year.
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The refinance share of mortgage activity also took a hit, dropping to 30.5% from 31.6% in the previous week. In contrast, the FHA share of total applications slightly increased to 14.8% from 14.4%, and the VA share rose to 10.7% from 10.2%. The USDA share remained stable at 0.5%.
"Refinance activity was at its lowest level since early 2023," Kan said. "There is very limited refinance incentive with mortgage rates at multi-decade highs."
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