Mortgage Applications Decrease in Latest Weekly Survey

Last Updated on October 6, 2023 by Robert C. Hoopes

Title: Mortgage Applications Plummet as Rates Reach Highest Level in Two Decades

Date: [Insert Date]

Mortgage applications in the United States have witnessed a significant decline, with a staggering 6.0 percent decrease from the previous week, according to the latest data from the Weekly Mortgage Applications Survey. The survey, covering more than 75 percent of all U.S. retail residential mortgage applications, highlighted the impact of rising interest rates on the housing market.

The Market Composite Index, which measures mortgage loan application volume, mirrored this decline by also dropping 6.0 percent. Furthermore, the Refinance Index witnessed a notable 7 percent decrease compared to the previous week and a staggering 11 percent decrease from the same week last year.

Adding to the grim figures, the seasonally adjusted Purchase Index decreased by 6 percent from the previous week, marking a 22 percent decline compared to the same week last year. Mortgage rates steadily climbed, with the 30-year fixed mortgage rate reaching an alarming 7.53 percent – the highest rate seen since 2000.

Unsurprisingly, the surge in rates has significantly impacted mortgage applications and the housing market. Both categories found themselves at their lowest levels since 1996 and 1995, respectively. Potential homebuyers now face higher borrowing costs, posing challenges to those considering entering the market.

However, amidst the gloom, Adjustable Rate Mortgage (ARM) loan applications experienced a slight increase as borrowers sought to lower their monthly payments. This shift indicates that individuals are exploring alternative options to counteract the mounting rates.

Remarkably, the survey revealed that the refinance share of mortgage activity diminished to 31.7 percent of total applications, a downward trend likely reflecting the unfavorable climate for refinancing. Meanwhile, the Federal Housing Administration’s (FHA) share of total applications increased to 14.5 percent. Conversely, the Veterans Affairs (VA) share decreased to 10.1 percent.

The data also disclosed that the average contract interest rate for 30-year fixed-rate mortgages rose to 7.53 percent for conforming loan balances, 7.51 percent for jumbo loan balances, and 7.29 percent for FHA-backed mortgages. Additionally, the average contract interest rate for 15-year fixed-rate mortgages increased to 6.86 percent, while the rate for 5/1 Adjustable Rate Mortgages (ARMs) sat at 6.49 percent.

The Weekly Mortgage Applications Survey provides valuable insights into the current state of the housing market, with coverage extending back to 1990. These findings serve as a vital resource for industry professionals, homebuyers, and economists alike. As interest rates continue to play a pivotal role in shaping the mortgage landscape, monitoring these trends becomes increasingly important for anyone considering entering the market or refinancing an existing mortgage.