U.S. mortgage applications fell 5.3% in the week ended Oct. 16, the Mortgage Bankers Association said, as a modest rate retreat did not halt declines in home-purchase and refinancing demand.
The MBA’s seasonally adjusted total-application index recorded the weekly decrease. The average contract rate for a conforming 30-year fixed mortgage eased to 7.41% from 7.50%, its first decline in more than two months, the association said.
The purchase measure weakened more sharply. Its seasonally adjusted index fell 7% from the prior week; the unadjusted purchase index also dropped 7% over that period and stood 18% below its year-earlier level. The annual comparison uses the unadjusted measure, while the first weekly figure uses the seasonally adjusted index.
Refinance applications slid 2% on the week and were 59% lower than a year earlier. MBA Vice President and Deputy Chief Economist Joel Kan said the rate decline had not revived activity, with elevated borrowing costs still keeping some buyers out. Adjustable-rate mortgages made up 10.5% of applications, unchanged from the previous week. Kan said their rates were nearly a percentage point below the 30-year fixed rate, giving qualified borrowers a lower-rate option for a home purchase.
CNBC reported that mortgage rates remained more than a percentage point above their level a year earlier, limiting refinancing opportunities. The outlet also noted that adjustable-rate loans can reset to market rates when their terms end, a risk for borrowers who choose them for their lower rates.
The application figures follow a separate housing indicator: the National Association of REALTORS® (NAR) said pending home sales fell 7.3% in September from August. That index tracks signed contracts, a different stage of the homebuying process from loan applications. EconoTimes covered the September pending-home-sales decline. NAR’s schedule sets the October pending-sales report for Nov. 18 at 10 a.m. ET.
