Thanks to some help from declining rates on adjustable rate mortgages, mortgage applications increased overall 0.6% from last week’s 6.0% decrease, according to the latest Weekly Mortgage Applications Survey from the Mortgage Bankers Association’s (MBA) for the week ending October 6, 2023.
Here’s a look at this week’s numbers:
- The Market Composite Index, a measure of mortgage loan application volume, increased 0.6% on a seasonally adjusted basis from one week earlier.
- On an unadjusted basis, the Index increased 1% compared with the previous week.
- The Refinance Index increased 0.3% from the previous week and was 9% lower than the same week one year ago.
- The seasonally adjusted Purchase Index increased 1% from one week earlier.
- The unadjusted Purchase Index increased 1% compared with the previous week and was 19% lower than the same week one year ago.
- The refinance share of mortgage activity decreased to 31.6% of total applications from 31.7% the previous week.
- The adjustable-rate mortgage (ARM) share of activity increased to 9.2% of total applications.
- The FHA share of total applications decreased to 14.4% from 14.5% the week prior.
- The VA share of total applications increased to 10.2% from 10.1% the week prior.
- The USDA share of total applications remained unchanged at 0.5% from the week prior.
- The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) increased to 7.67% from 7.53%, with points decreasing to 0.75 from 0.80 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate increased from last week.
- The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $726,200) increased to 7.70% from 7.51%, with points decreasing to 0.57 from 0.74 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
- The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 7.40% from 7.29%, with points increasing to 1.08 from 1.01 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
- The average contract interest rate for 15-year fixed-rate mortgages increased to 6.97% from 6.86%, with points increasing to 1.18 from 1.14 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
- The average contract interest rate for 5/1 ARMs decreased to 6.33% from 6.49%, with points decreasing to 0.90 from 1.21 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
MBA’s take:
“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,” said Joel Kan, MBA’s vice president and deputy chief economist. “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.”
