The Mortgage Bankers Association’s (MBA) latest survey recorded a modest but positive 3.4% increase in mortgage loan application volume from last week’s survey.
The mortgage loan application volume, also known as the Market Composite Index, is MBA’s measure of the mortgage purchases, refinances and other mortgage activities in the week before the survey’s release. Data for this latest survey reflects mortgage activities in the week ending Oct. 23.
The 3.4% rise (3% if not seasonally adjusted) in this week’s survey represents a much-anticipated rise after a recent series of declines.
Climbing mortgage rates, which reached 7.63% in October, demotivated many would-be buyers and refinancers. When rates finally took a downturn around Oct. 22, the first time in two months, some might have hoped that buyers and refinancers would jump at the chance. Instead, mortgage rates continued to decrease in last week’s survey.
This week’s survey reveals that continued mortgage rate decline for the second week— as of writing, 30-year fixed rates currently sit at 7.33%—may have finally moved the needle. As MBA Vice President and Deputy Chief Economist Joel Kan says, “The decline in rates gave borrowers some relief, with applications rebounding slightly, particularly conventional applications.”
From the big picture, however, the data is still somewhat discouraging. In MBA’s press release, Kan stated that even though “purchase applications increased over the week, they were 18 percent behind last year’s pace as many homebuyers have put their purchase plans on hold. Similarly, refinance applications were down more than 60 percent from a year ago, as most borrowers have little to gain from refinancing.”
Adjustable rate mortgages (ARMs), which potentially give the homeowner the option to obtain lower monthly payments for a given period, continue to do well in this week’s survey. Their share of the market soared from 10.5% to 11.3%, and MBA’s report recorded a further decrease to 6.41% from 6.46% in average contract interest rates for 5/1 ARMs.
Government-backed were more of a mixed bag in this week’s survey. The FHA share increased to 16.6% from 16.3%, but the VA share decreased to 11.0% from 11.5%. The USDA share remains unchanged at 0.5%.
To view the full report, click here.
