Mortgage rates have been on an upward trend for more than two months, and would-be homebuyers are increasingly hitting the brakes on their home purchase plans.
The Mortgage Bankers Association (MBA) survey shows that the mortgage composite index for the week ending Oct. 21 fell 1.7% from the prior week when it reached its 25-year low. Mortgage loan application volume plummeted 69% compared to the same period in 2021. The survey, conducted weekly since 1990, covers 75% of all U.S. retail residential mortgage applications.
The refinance index was essentially unchanged, increasing marginally by 0.1% from the week prior, but was 86% lower than the same week one year ago. Meanwhile, the seasonally adjusted purchase index declined 2% from a week earlier, hitting its slowest pace since 2015, and down 42% from this time last year.
Mortgage rates increased for the 10th consecutive week, and “the ongoing trend of rising mortgage rates continues to depress mortgage application activity, which remained at its slowest pace since 1997,” Joel Kan, MBA’s vice president and deputy chief economist, said.
The survey shows that the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 7.16% last week, the highest level since 2001. Rates for jumbo loan balances (greater than $647,200) went to 6.53% from 6.31% in the same period.
According to Mortgage News Daily, the average 30-year fixed rate mortgage on Tuesday was 7.15%.
Despite higher rates and lower overall application activity, there was a slight increase in FHA purchase applications, as FHA rates remained lower than conventional loan rates, Kan said.
The FHA share of total applications slightly increased to 13.9% from 13.6% the week prior. The VA and USDA share remained unchanged at 10.7% and 0.5% respectively.
While the refinance share of mortgages rose to 28.8% last week from the previous week, the adjustable-rate mortgage (ARM) share of the total applications declined to 12.7%.