Mortgage application activity last week slowed to a pace not seen in 25 years as mortgage rates continued to rise, according to the Mortgage Bankers Association.
Mortgage applications of all types for the week ending Sept. 30 decreased 14.2 percent on a seasonally adjusted basis from one week earlier, the MBA said in a statement. On an unadjusted basis, the MBA’s weekly mortgage tracker showed a decrease of 14 percent compared with the previous week.
While mortgage demand historically begins to drop off in the fall, activity has slowed for most of the past two months. Only the week ending Sept. 16 saw a week-over-week increase in mortgage activity, on a seasonally adjusted basis and also adjusted for the Labor Day holiday, of 3.8 percent.
Both refinance and purchase activity contributed to the most recent weekly decline. The MBA’s refinance activity tracker decreased 18 percent from the previous week and was 86 percent lower compared to the same week one year ago. The seasonally adjusted purchase activity tracker decreased 13 percent from one week earlier. The unadjusted purchase activity also decreased 13 percent compared with the previous week and was 37 percent lower than the same week one year ago.
“Mortgage rates continued to climb last week, causing another pullback in overall application activity, which dropped to its slowest pace since 1997,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a statement. “The 30-year fixed rate hit 6.75 percent last week – the highest rate since 2006. The current rate has more than doubled over the past year and has increased 130 basis points in the past seven weeks alone.”
The refinance share of mortgage activity decreased to 29 percent of total applications last week compared to 30.2 percent in the previous week. The adjustable-rate mortgage share of activity increased to 11.8 percent of total applications.
“The steep increase in rates continued to halt refinance activity and is also impacting purchase applications, which have fallen 37 percent behind last year’s pace,” Kan said. “Additionally, the spreads between the conforming rate compared to jumbo loans widened again, and we saw the ARM share rise further to almost 12 percent of applications.”
Kan added that last week’s activity was affected by Hurricane Ian’s arrival in Florida and the widespread closings and evacuations. He said applications in Florida fell 31 percent compared to 14 percent overall on a non-seasonally adjusted basis.