Home loan application activity starts flat in September
It was another down week for the mortgage market, with loan applications dwindling by 1.2% for the week ending September 9.
Overall mortgage application volume dropped 1.2% on a seasonally adjusted basis and down 12% on an unadjusted basis, according to the Mortgage Bankers Association’s latest report.
“The 30-year fixed mortgage rate hit the 6% mark for the first time since 2008 – rising to 6.01% – which is essentially double what it was a year ago,” said Joel Kan, AVP of economic and industry forecasting at MBA. “Higher mortgage rates have pushed refinance activity down more than 80% from last year and have contributed to more homebuyers staying on the sidelines.”
MBA’s refinance index posted a 4% week-over-week decrease, while the purchase index inched up 0.2% on a seasonally adjusted basis. When unadjusted, however, purchase activity was down 12% weekly and 29% annually.
The refinance share of total mortgage applications fell five basis points to 30.2%, while the adjustable-rate mortgage (ARM) share of activity increased to 9.1%. The FHA and USDA shares of activity both climbed one basis point to 13.4% and 0.7%, and the VA share rose five basis points to 11.3%.
“Government loans, which tend to be favored by first-time buyers, bucked this trend and increased over the week, driven mainly by VA and USDA lending activity,” Kan added. “The spread between the conforming 30-year fixed mortgage rate and both ARM and jumbo loans remained wide last week, at 118 and 45 basis points, respectively. The wide spread underscores the volatility in capital markets due to uncertainty about the Fed’s next policy moves.”