Mortgage application volume fell 11.9% on an adjusted basis during the week ended Oct. 18, driven by a sharp decrease in applications for refinances resulting from a jump in mortgage rates, the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey shows.
Applications for refinances decreased 17% from the previous week while applications for purchases fell 4%.
Still, applications for refinances were up 126% compared with the same week one year earlier.
On an unadjusted basis, total volume fell 12%. Applications for purchases decreased 4% on an unadjusted basis but were up 6% compared with a year earlier.
“Interest rates continue to be volatile, with Brexit votes and ongoing trade negotiations swinging rates higher or lower on any given day,” says Mike Fratantoni, senior vice president and chief economist for the MBA, in a statement. “Last week, mortgage rates jumped 10 basis points and were above four percent for the first time since September.”
“The increase in mortgage rates caused refinance applications to drop 17 percent, and by more than 20 percent for conventional loans,” Fratantoni says. “Borrowers with larger loans are the most sensitive to rate changes, and with rates climbing higher last week, the average size of a refinance loan application fell to its lowest level this year.”
He adds that “Low mortgage rates continue to fuel buyer interest, but supply and affordability challenges persist.”
The refinance share of mortgage activity decreased to 58.5% of total applications, down from 62.2% the previous week.
The adjustable-rate mortgage (ARM) share of activity decreased to 4.8% of total applications.
The average rate for a 30-year fixed-rate mortgage was 4.02%, up from 3.92%.