Mortgage applications dropped to their lowest level in nearly 30 years, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending October 13, 2023.
MBA’s Market Composite Index, which measures mortgage application volume, dropped 6.9% on a seasonally adjusted basis compared to the previous week. On an unadjusted basis, the Index decreased by 7% compared to the previous week.
Meanwhile, the Refinance Index declined by 10% from the previous week and was 12% lower than the same week last year. The seasonally adjusted Purchase Index dropped 6% compared to one week earlier. The unadjusted Purchase Index fell by 5% compared to the previous week and was 21% lower than the same week last year.
“Applications decreased to their lowest level since 1995, as the 30-year fixed mortgage rate increased for the sixth consecutive week to 7.70 percent – the highest level since November 2000,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Both purchase and refinance applications declined, driven by larger drops for conventional applications. Purchase applications were 21 percent lower than the same week last year, as homebuying activity continues to pull back given reduced purchasing power from higher rates and the ongoing lack of available inventory. The ARM share was 9.3 percent, the highest share in 11 months, as some borrowers look for alternative ways to lower their monthly payments. Refinance activity was at its lowest level since early 2023. There is very limited refinance incentive with mortgage rates at multi-decade highs.”
The Refinance Index dropped to 30.5% of total applications. It was 31.6% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 9.3%, accounting for their highest share in 11 months. This is likely the product of people looking for alternative ways to lower monthly payments.
The share of FHA mortgage applications rose to 14.8% from 14.4% the previous week. The share of VA applications rose to 10.7% from 10.2% the previous week. The share of USDA mortgage applications remained steady at 0.5% from the prior week.
Average contract interest rates:
- The 30-year conforming fixed rose to 7.70% from 7.67%. Points fell to 0.71 from 0.75. The effective rate also increased from last week.
- The 30-year jumbo fixed dropped to 7.56% from 7.70%. Points increased to 0.85 from 0.57. The effective rate declined from last week.
- The 30-year FHA fixed fell to 7.36% from 7.40%. Points dropped to 1.02 from 1.08. The effective rate also decreased from last week.
- The 15-year fixed increased slightly to 6.98% from 6.97%. Points decreased to 1.04 from 1.18. The effective rate decreased from last week.
- The 5/1 ARMs rate rose to 6.52% from 6.33%. Points rose to 1.50 from 0.90. The effective rate increased from last week.
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