Mortgage application volume decreased 12.7% during the week ended September 26, as rates increased, according to the Mortgage Bankers Association’s (MBA) Weekly Applications Survey.
Applications for refinances fell 21% compared with the previous week but were up 16% compared with the same week one year ago.
Applications for purchases decreased 1% compared with the previous week but were up 16% compared with the same week one year ago.
Last week, the average rate for a 30-year fixed-rate mortgage with conforming loan balance, based on closings, was 6.46%, up from 6.34% the previous week.
“Mortgage rates increased to their highest level in three weeks as Treasury yields pushed higher on recent, stronger than expected economic data,” explains Joel Kan, vice president and deputy chief economist for the MBA, in a statement. “After the burst in refinancing activity over the past month, this reversal in mortgage rates led to a sizable drop in refinance applications, consistent with our view that refinance opportunities this year will be short-lived.”
“With the 30-year fixed rate now at 6.46 percent, refinance activity declined for all loan types, including a 22 percent decrease in conventional refinances and 27 percent decrease in VA refinances,” Kan says. “The average loan size for refinances dropped to $380,100 from $461,300 two weeks ago as these higher rates eliminated the refinance incentive for many borrowers with large loans.”
“Purchase applications were down slightly over the week after three consecutive increases, but the strength of the purchase market has also been impacted by other factors such as broader economic conditions, the health of the job market, and housing inventory,” Kan adds.
The refinance share of mortgage activity decreased to 55.0% of total applications, down from 60.2% the previous week.
The adjustable-rate mortgage (ARM) share of activity decreased to 8.4% of total applications.
Photo: Romain Dancre