Mortgage application activity remained flat after Fed rate hike

Enjoy complimentary access to top ideas and insights — selected by our editors.

Mortgage application activity was relatively flat compared with the previous week, as long-term interest rates held steady following the recent Fed rate hike, according to the Mortgage Bankers Association.

The MBA's Weekly Mortgage Applications Survey for the week ending Sept. 28 found that volume decreased by 0.2% from the previous week.

"Rates were little changed last week, following the most recent [Federal Open Market Committee] meeting where the Fed announced another rate hike based on the health of the economy and job market as expected, " Joel Kan, the MBA's associate vice president of economic and industry forecasting, said in a press release. "Short-term rates have been increasing but long-term rates have held steady, which should not pose too much of a headwind to home purchase activity, especially given the potential demand from demographic factors."

Kan noted even though applications activity was essentially unchanged from the previous week, purchase applications increased by 3% from a year ago in a rising interest rate environment. "Even with the slight increase in rates, the 15-year fixed rate reached its highest level since April 2010 and the 30-year jumbo rate increased to its highest rate since July 2011," he said.

The seasonally adjusted purchase index increased 0.1% from one week earlier, while the unadjusted purchase index decreased 0.2% compared with the previous week and was 3% higher than the same week one year ago.

The refinance index fell by 0.1% from the previous week. Refinancings made up 39.4% of total applications, unchanged from the previous week.

Adjustable-rate loan activity increased to 7.1% from 6.5% of total applications, while the share of Federal Housing Administration-guaranteed loans decreased to 10.2% from 10.4% the week prior.

The share of applications for Veterans Affairs-guaranteed loans decreased to 10% from 10.1% and the U.S. Department of Agriculture/Rural Development share remained unchanged at 0.7% from the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) decreased 1 basis point to 4.96%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100), the average contract rate increased 1 basis point 4.93%.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased 1 basis point to 4.95%, while for 15-year fixed-rate mortgages the average increased 1 basis point to 4.39%.

The average contract interest rate for 5/1 ARMs increased to its highest level in the history of the survey, 4.24%, from 4.22%.