Homebuyers brush off higher mortgage rates

Mortgage application activity was largely flat for the week ending Oct. 8, despite mortgage rates reaching their highest level since June.

That’s according to the latest mortgage application survey from the Mortgage Bankers Association, which said applications overall increased just 0.2% from the prior week.

“An increase in home purchase applications offset a slight decline in refinances,” said Joel Kan, the MBA’s vice president of economic and industry forecasting. “The increase in purchase applications was welcome news, but was primarily driven by a 2% gain in conventional purchase applications, which kept the average loan size elevated.”

The refinance index decreased 1% from the previous week and was 16% lower than the same week one year ago. The seasonally adjusted purchase index increased 2% from the prior week; the unadjusted purchase index was 10% lower than it was a year ago.

“The 30-year fixed rate reached 3.18% last week and has risen 15 basis points over the past month, resulting in an 11% drop in refinance applications during this time,” Kan noted. “Government refinance applications fell over 3% last week, driven by a decline in FHA refinances and an eight-basis-point increase in the average FHA mortgage rate. We continue to expect weakening refinance activity as  rates move higher and borrowers see less of a rate incentive.” 

Overall, the share of refi mortgage applications decreased to 63.9% from 64.5% the prior week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 3.4% of total applications; the share of FHA applications decreased to 10.2% from 10.5% the week prior; and the VA share of total applications decreased to 10.2% from 10.3%.  

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater  than $548,250) increased to 3.22% from 3.20%.

Many lenders these days are also bringing back loan products that they shelved during the pandemic, including non-QM jumbo loans.

The post Homebuyers brush off higher mortgage rates appeared first on HousingWire.

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