It’s as you’d expect with rates in the 7

There was a slight increase in refinances in the week ended October 21, but overall mortgage applications fell for the fifth week in a row. The Mortgage Bankers Association (MBA) said its Composite Market Index, a measure of mortgage application volume, was down 1.7% on a seasonally adjusted basis from the previous week and down 2% on an unadjusted base.

The seasonally adjusted purchases index fell another 2% and was 3% before adjustment. This put the volume of purchase requests 42% below its level at the same time in 2021.

The refinancing index rose 0.1% week over week and was 86% lower than the same week a year ago. The share of refinancing requests for the week reached 28.8% against 28.3% the previous week.

“Mortgage rates rose for the 10th consecutive week, with the 30-year fixed rate hitting 7.16%, the highest rate since 2001. The continued upward trend in mortgage rates continues to depress mortgage demand activity. mortgage lending, which remained at its slowest pace since 1997,” said Joel Kan, vice president and deputy chief economist at MBA. “Refinance applications remained essentially flat, but purchase applications declined 2% at the slowest pace since 2015 – more than 40% behind last year’s pace. Despite higher rates and lower overall demand activity, there was an uptick in FHA purchase inquiries as FHA rates remained lower than conventional loan rates.

MBA’s economic forecast for the year ahead was released earlier this week and Kan referenced his prediction that weak economy and housing market in 2023 “will lead to a 3% drop in purchases , while the volume of refinancing is expected to decline by 24%”.

Other highlights from the weekly MBA Mortgage Application Survey:

  • The size of mortgages increased from an average of $366,000 to $362,900. The size of purchase loans was essentially unchanged at $402,400, but that average was down about $60,000 from its all-time high in March.
  • FHA’s share of total claims fell from 13.6% to 13.9%, while VA and USDA’s shares remained unchanged from the previous week at 10.7% and 0.5%, respectively.
  • The average contract rate for the week of 7.16% for 30-year conforming fixed rate mortgages (FRMs) was up from 6.94% the previous week. Points have been reduced to 0.88 from 0.95.
  • The average contract interest rate for the 30-year jumbo FRM was 6.53%, down from 6.31%, with points dropping from 0.67 to 0.68.
  • The thirty-year FRM with FHA support had an average rate of 6.79% with 1.59 points. The previous week, the rate was 6.63% with 1.60 points.
  • The 15-year FRM rate rose 30 basis points to 6.39%. Points went from 1.18 to 1.52.
  • The average rate for 5/1 variable rate mortgages (ARMs) increased from 5.65% to 5.86%. with points decreasing from 0.90 to 0.88.
  • ARM’s share of business decreased week over week, from 12.8% to 12.7%.

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