Mortgage Activity Drops to 9-Month Low
Nov 1st, 2017 @ 10:52 AM by Amber Nelson
As long-term U.S. mortgage interest rates moved higher, mortgage application volume fell to its lowest level since mid-February, according to data from the Mortgage Bankers Association.
The MBA Market Composite Index, a measure of total mortgage loan application volume, dropped 2.6 percent in the week ended October 27, 2017, from the previous week. While home purchase requests slipped 1 percent, the majority of the mortgage activity drop came from a 5 percent decrease in refinance applications. Refinance requests made up just 48.7 percent of all applications last week, down from 49.5 percent the previous week.
The MBA reported that rising mortgage interest rates scared borrowers away from refinancing. The average rate on a 30-year fixed rate mortgage rose to its highest level since July 2017, climbing to 4.22 percent, up from 4.18 percent the week before. Rates on 15-year fixed rate mortgages rose to a 7-month high, growing to an average of 3.52 percent, up from 3.48 percent a week earlier.
Mortgage interest rates jumped last week on market speculation about President Donald Trump’s potential nominees for the Federal Reserve Chairperson. He is expected to announce his decision Thursday. His current considerations include current Chair Janet Yellen, Fed Governor Jerome Powell, Fed Governor Kevin Warsh or Stanford University economist John Taylor. President Trump has even contemplated nominating his own economic adviser Gary Cohn.
Most government-backed loan applications increased this week, with the share of FHA loan request rising to 10.4 percent of the total, up from 9.8 percent the week before. USDA loan applications rose to 0.8 percent of all requests, up from 0.7 percent the week prior. VA loan requests fell though, to a 9.9 percent share, down from 10.1 percent.
Adjustable rate mortgages (ARMs) requests rose to 6.8 percent of all applications. ARM loans have consistently made up well under 10 percent of all loans since the housing bubble burst a decade ago.
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.