Home lending activity log at slowest pace in 25 years.
The Mortgage Bankers Association reported a double-digit weekly decrease in mortgage application volume for the week ending Sept. 30.
Overall mortgage loan applications plunged 14.2% on a seasonally adjusted basis from the previous week, the slowest pace in 25 years. The prime explanation for the pullback in application activity, according to MBA associate vice president Joel Kan, was the recent spike in mortgage rates.
“The 30-year fixed rate hit 6.75% last week – the highest rate since 2006,” Kan said. “The current rate has more than doubled over the past year and has increased 130 basis points in the past seven weeks alone.”
Kan added that the steep rate increase continued to halt refinance activity (-18% week over week) and purchase applications (-13%). Year over year, refi applications have fallen behind by 86%, and purchase applications were down 37%.
“Additionally, the spreads between the conforming rate compared to jumbo loans widened again, and we saw the ARM share rise further to almost 12% of applications,” Kan said. “There was also an impact from Hurricane Ian’s arrival in Florida last week, which prompted widespread closings and evacuations. Applications in Florida fell 31%, compared to 14% overall, on a non-seasonally adjusted basis.”
The refinance share of mortgage activity dropped to 29% of total applications, while the adjustable-rate mortgage share rose to 11.8% of total applications.