Mortgage application activity slowed dramatically during the week ending Sept. 26, according to data from the Mortgage Bankers Association.
The Market Composite Index, the MBA’s measure of mortgage loan application volume, dropped by 12.7% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the index fell by 13%.
The seasonally adjusted Purchase Index dipped by 1% from one week earlier while the unadjusted index was down by 2% – the latter was also 16% higher than the same week one year ago.
The Refinance Index plummeted by 21% from the previous week, although it was 16% higher than the same week one year ago. The refinance share of mortgage activity decreased to 55.0% of total applications from 60.2% the previous week.
Among the federal programs, the FHA share of total applications increased to 16.8% from 15.7% the week prior while the VA share of total applications decreased to 16.2% from 17.5% and the USDA share of total applications remained unchanged at 0.4%.
“Mortgage rates increased to their highest level in three weeks as Treasury yields pushed higher on recent, stronger than expected economic data. After the burst in refinancing activity over the past month, this reversal in mortgage rates led to a sizeable drop in refinance applications, consistent with our view that refinance opportunities this year will be short-lived,” said Joel Kan, MBA’s vice president and deputy chief economist. “With the 30-year fixed rate now at 6.46%, refinance activity declined for all loan types, including a 22% decrease in conventional refinances and 27% decrease in VA refinances. The average loan size for refinances dropped to $380,100 from $461,300 two weeks ago as these higher rates eliminated the refinance incentive for many borrowers with large loans. Purchase applications were down slightly over the week after three consecutive increases, but the strength of the purchase market has also been impacted by other factors such as broader economic conditions, the health of the job market, and housing inventory.”
