A 60 basis point increase in mortgage rates in October has strangled mortgage demand, particularly for refinancings, according to the latest survey data from the Mortgage Bankers Association.
Mortgage applications overall decreased 0.1% from one week earlier, per the MBA‘s weekly applications survey for the week ending Oct. 25.
The Market Composite Index, a measure of mortgage loan application volume, decreased 0.1% on a seasonally adjusted basis from one week earlier, but fell 1% on an unadjusted basis.
Due to the increase in mortgage rates, the refinance index decreased 6% from the prior week and 43% from the prior month, though it was 84% higher than a year ago, when rates were closer to 8%. The seasonally adjusted purchase index increased 5% from the prior week. The unadjusted purchase index was 10% higher than the same week a year ago.
“Mortgage applications were essentially flat last week as rates increased for the fourth time in five weeks, driven by bond market volatility in advance of the presidential election and the next FOMC meeting. The 30-year fixed rate, at 6.73%, was at its highest level since July 2024,” said Joel Kan, MBA’s deputy chief economist. “After a brief burst of activity in September when rates were almost 60 basis points lower, overall applications have declined 27%, driven by a pullback in refinances. Government refinances accounted for a large part of the decrease, dropping 12% over last week.”
Added Kan, “Purchase applications increased compared to a holiday-shortened week and were 10 percent higher than a year ago. While near-term purchase application activity has weakened, we continue to expect housing demand from younger homebuyers to support purchase growth over the next few years as for-sale inventory loosens gradually.”
The refinance share of mortgage activity decreased to 43.1% of total applications from 45.7% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.4% of total applications.
