Adjustable-rate mortgage applications hit highest level since Nov 2022
Mortgage application volume rose as demand for adjusted-rate mortgages (ARMs) picked up due to lower rates.
The Mortgage Bankers Association’s survey for the week ending Oct. 6 showed that loan application activity increased by 0.6% (1% when seasonally unadjusted) from the previous week. Refinance applications were up by 0.3%, and purchase applications were up by 1%.
MBA deputy chief economist Joel Kan said the uptick in overall applications was driven by an increase in ARM volume.
“While most mortgage rates increased last week, rates on ARMs declined, leading to an increase in ARM volume and an increase in overall applications,” Kan explained. “The level of ARM applications increased by 15% over the week, bringing the ARM share up to 9.2% of all applications, the highest share since November 2022. The yield curve has become less inverted in recent weeks, and ARM pricing has certainly improved.”
According to MBA’s data, the average contract interest rate for 30-year fixed-rate mortgages has skyrocketed to a 23-year high – up 40 basis points to 7.67%.
Read more: Near 8% mortgage rates darken housing market outlook
Consequently, the refinance share of total applications continued to decrease to 31.6%, down from 31.7% the week before. The ARM share of mortgage activity, on the other hand, grew to 9.2% of total applications.
“Application activity remains depressed and close to multi-decade lows, with purchase applications still almost 20% behind last year’s pace,” Kan said. “Refinance applications also continue to be limited, and the average loan size has fallen to its lowest level since 2017.”
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