Mortgage Applications Slide, Interest Rate Moves Mixed

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The Mortgage Bankers Association (MBA) released its weekly report on mortgage applications Wednesday morning, noting a decrease of 2.5% in the group’s seasonally adjusted composite index for the week ending October 26. Mortgage interest rates rose on two of five types of loans the MBA tracks.

On an unadjusted basis, the MBA’s composite index fell by 3% week over week. The seasonally adjusted purchase index decreased by 2% compared with the week ended October 19. The unadjusted purchase index also dipped by 2% for the week and was 0.4% lower year over year.

Mortgage loan rates for top-tier borrowers dipped slightly last week from a prior week’s ending value of 4.99% to 4.94% for a 30-year fixed-rate loan, according to Mortgage News Daily. As of Tuesday night, top-tier borrowers are looking at a rate of 4.96%. The yield on a 10-year U.S. Treasury note has slipped from 3.17% last Tuesday to 3.12% last night. A year ago the 10-year note yielded 2.37%.

Joel Kan, the MBA’s associate vice president of economic and industry forecasts, commented:

Purchase applications may have been adversely impacted by the recent uptick in rates and the significant stock market volatility we have seen the past couple of weeks. Additionally, the ARM [adjustable rate mortgage] share of applications increased to its highest level since 2017, but since this is a compositional measure, it was driven by a greater decrease in applications for fixed-term loans relative to the decrease in ARM applications.

The MBA’s refinance index decreased by 4% week over week and the percentage of all new applications that were seeking refinancing decreased from 39.8% to 39.4%.

Adjustable rate mortgage loans accounted for 7.6% of all applications, up 0.6 points compared with the prior week, and the highest level since May 2017.

According to the MBA, last week’s average mortgage loan rate for a conforming 30-year fixed-rate mortgage remained unchanged at 5.11%. The rate for a jumbo 30-year fixed-rate mortgage fell from 5.01% to 4.94%. The average interest rate for a 15-year fixed-rate mortgage rose from 4.50% to 4.55%.

The contract interest rate for a 5/1 adjustable rate mortgage loan decreased from 4.47% to 4.33%. Rates on a 30-year FHA-backed fixed-rate loan ticked up from 5.07% to 5.08%.