Mortgage applications edged up by 0.6% in the week ending Oct. 6, 2023, according to the latest data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey.
The Market Composite Index, which gauges the volume of mortgage loan applications, witnessed a 0.6% uptick on a seasonally adjusted basis from the previous week. Without seasonal adjustments, the index saw a 1% rise. Meanwhile, the Refinance Index rose by 0.3% over the week but was down by 9% from the same period last year. On the other hand, purchase applications saw a 1% increase on a seasonally adjusted and unadjusted basis. However, they trailed last year's numbers by a significant 19%.
Adjustable rate mortgages [ARMs] were the one bright spot, according to the MBA.
"While most mortgage rates increased last week, rates on ARMs declined, leading to an increase in ARM volume and an increase in overall applications. The level of ARM applications increased by 15% over the week, bringing the ARM share up to 9.2% of all applications, the highest since November 2022. The yield curve has become less inverted in recent weeks, and ARM pricing has certainly improved," MBA’s Deputy Chief Economist Joel Kan said.
Refinances made up 31.6% of overall activity for the week, marking a slight dip from the previous week. Meanwhile, the adjustable-rate mortgage (ARM) share rose to 9.2%, its highest since November 2022.
In terms of mortgage types:
- The FHA-backed mortgages saw their share decline slightly to 14.4%.
- VA-backed mortgage applications increased their share to 10.2%.
- USDA-backed mortgages maintained their 0.5% share.
- Interest rates for the 30-year fixed-rate mortgages with conforming loan balances ($726,200 or under) reached a staggering 7.67%, the highest since the turn of the millennium, and a significant hike from the previous week's 7.53%.
- Similarly, jumbo loans and FHA-backed 30-year fixed-rate mortgages saw their interest rates climb to 7.70% and 7.40% respectively.
Conversely, 5/1 ARMs experienced a drop in their average contract interest rate to 6.33% from 6.49%.
"The 30-year fixed mortgage rate is at 7.67% – the highest level since 2000 and 40 basis points higher than a month ago. Application activity remains depressed and close to multi-decade lows, with purchase applications still almost 20% behind last year’s pace. Refinance applications also continue to be limited, and the average loan size has fallen to its lowest level since 2017," Kan said.
