Mortgage applications rose 0.3% on a week-over-week, seasonally adjusted basis in the week ended Oct. 22, while the average 30-year fixed mortgage rate rose seven basis points to 3.30%, the Mortgage Bankers Association said, citing its Market Composite Index.
The average contract interest rate for a 15-year fixed-rate mortgage rose to 2.59% from 2.54%. The 15-year and 30-year rates represented the highest levels for those home loan products in eight months, MBA Associate Vice President of Economic and Industry Forecasting Joel Kan said in a press release.
On an unadjusted basis, the market composite index, which measures mortgage loan application volume, rose 0.2%.
The refinance index, meanwhile, slid 2% from the previous week and was down 9% from the same week a year ago. The refinance share of mortgage activity decreased to 62.2% of total applications from 63.3% the previous week.
“The increase in rates triggered the fifth straight decrease in refinance activity to the slowest weekly pace since January 2020,” Kan said. “Higher rates continue to reduce borrowers’ incentive to refinance.”
The adjustable-rate mortgage share of activity decreased to 3.1% of total applications. The FHA share of total applications increased to 10.4% from 10.2% in the preceding week, while the VA share of applications rose to 10.6% from 10.4%. The USDA share of applications was flat, at 0.5%.
The seasonally adjusted purchase index rose 4% from the previous week, while the unadjusted purchase index was up 3% on a weekly basis and down 9% on an annual basis.
“Purchase applications picked up slightly, and the average loan size rose to its highest level in three weeks, as growth in the higher price segments continues to dominate purchase activity,” Kan added, noting that both new- and existing-home sales in September were at their fastest pace since early 2021, but first-time homebuyers are accounting for a declining share of activity. “Home prices are still growing at a rapid clip, even if monthly growth rates are showing signs of moderation, and this is constraining sales in many markets, and particularly for first-timers.”