Mortgage applications dwindle for the sixth straight week.
The Mortgage Bankers Association (MBA) reported another dip in home loan applications as interest rates continue to rise.
During the week ending October 28, MBA saw a 0.5% drop in its market composite index, a measure of mortgage application volume. The refinance index increased by 0.2%, and the purchase index decreased by 1% from the previous week.
"Mortgage applications declined for the sixth consecutive week despite a slight drop in rates. The 30-year fixed rate decreased for the first time in over two months to 7.06% but remained close to its highest since 2002," said MBA deputy chief economist Joel Kan. "With most homeowners locked into significantly lower rates, refinance applications continued to run more than 80% below last year's pace, while the refinance share of applications was 28.6% – the fifth straight week below 30%."
Of the total applications, the refinance share of mortgage activity was up four basis points to 28.6%, while the adjustable-rate mortgage share of activity decreased to 11.8%. The FHA share of total applications fell to 13.5%, the VA share dropped to 10.3%, and the USDA share of total applications remained unchanged at 0.5% from a week ago.
"Apart from the ARM loan rate, rates for all other loan types were more than three percentage points higher than they were a year ago," Kan said. "These elevated rates continue to put pressure on both purchase and refinance activity and have added to the ongoing affordability challenges impacting the broader housing market, as seen in the deteriorating trends in housing starts and home sales."
According to the National Association of Realtors, pending home sales in September tumbled 10.2% from August and were down 31% from a year ago. New home listings also dwindled annually since many homeowners were holding on to the ultra-low mortgage rates they locked in during the housing boom. Overall housing starts declined as well, to a seasonally adjusted rate of 1.44 million in September.