Mortgage application volume has experienced a decline for the fourth consecutive week, reaching its lowest point since July, attributed to decreased purchasing and refinancing activities, as reported by the Mortgage Bankers Association on Wednesday. The market composite index, a key indicator of loan application volume, has seen a significant drop of 6.7% for the week ending October 18, based on seasonally adjusted figures.
Without adjustments, the index fell by 7% compared to the previous week. In terms of the refinance index, there was an 8% decline on a weekly basis; however, it reflects a remarkable increase of 90% when compared to the same period last year. Meanwhile, the purchase index recorded a 5% decrease from the previous week on both adjusted and unadjusted bases.
Notably, without seasonal adjustments, there was a year-over-year gain of 3% in the purchase index. "Mortgage rates exhibited mixed outcomes last week," stated Joel Kan, the association's deputy chief economist. "The level of application activity has decreased to its lowest since July, following declines in both purchase and refinance applications." The average interest rate for 30-year fixed-rate mortgages, applicable to loans with conforming balances of $766,550 or less, remained steady at 6.52%.
For loan amounts exceeding that limit, the rate decreased slightly from 6.76% to 6.73%. On the side of 15-year loans, there was an increase in the rate from 5.94% to 5.98%. Additionally, fixed-rate mortgages with 30-year terms, which are backed by the Federal Housing Administration (FHA), slipped to 6.29% from 6.42% over the week.
The proportion of FHA loans, which are generally favored by first-time home buyers due to lower down payment requirements, rose to 16.9% of total applications compared to 15.9% the prior week. Despite the recent upswing in rates, they remain over one full percentage point lower than they were a year ago, which is keeping some homebuyers active in the market," Kan commented.
"The inventory of homes for sale is starting to loosen, and home-price growth has stabilized in certain markets, offering more choices for buyers, particularly in conjunction with these lower rates.".