Purchase application volume took a nosedive this week, thanks in large part to the long-running Washington brinksmanship that resulted in the government shutdown, according to an economist with the Mortgage Bankers Association.
Although mortgage application volume was up fractionally this week – increasing 3% from the previous week, according to MBA’s weekly mortgage application survey – purchase app volume sank 5% compared to the previous week, and 1% compared to a year ago.
MBA Vice President of Research and Economics Mike Fratantoni lays a large share of the blame at the feet of the federal government.
“The government shutdown had a notable impact on the mortgage market last week. Purchase applications for government programs dropped by more than 7% over the week to their lowest level since December 2007, and the government share of purchase applications dropped to its lowest level in almost three years,” Fratantoni said. “Conventional purchase applications dropped as well, but not to the same extent, falling almost 4% for the week.”
Rates were also up this week, with the average interest rate on a 30-year fixed-rate mortgage with a conforming loan balance rising from 4.42% to 4.46%. The average rate for a 30-year FRM with a jumbo loan balance rose from 4.45% to 4.51%, while the average rate for a 15-year FRM crept up from 3.52% to 3.53%. The average rate for 5/1 adjustable-rate mortgages remained unchanged at 3.25%.
The refinance share of mortgage activity continued to rise this week, up from last week’s 64% to 66% of total applications this week.