Mortgage applications drop as year-over-year purchase volume falls

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Mortgage applications decreased 2.5% from one week earlier as purchase activity compared with 2017 fell for the first time in nearly three months, according to the Mortgage Bankers Association.

The MBA's Weekly Mortgage Applications Survey for the week ending Oct. 26 found that the seasonally adjusted purchase index decreased 2% from the previous week. On an unadjusted basis the purchase index decreased 2% compared with the previous week and was 0.4% lower than at this time last year.

"The 30-year fixed-rate mortgage held steady over the week, but total applications decreased overall. Purchase applications inched backward from the previous week, as well as compared to one year ago — the first year-over-year decline in purchase activity since August," Joel Kan, the MBA's associate vice president of industry surveys and forecasts, said in a press release.

"Purchase applications may have been adversely impacted by the recent uptick in rates and the significant stock market volatility we have seen the past couple of weeks," he said.

The refinance index decreased 4% compared with the previous week and the refinance share of mortgage activity decreased to 39.4% of total applications from 39.8% the previous week.

"Additionally, the ARM share of applications increased to its highest level since 2017, but since this is a compositional measure, it was driven by a greater decrease in applications for fixed-term loans relative to the decrease in ARM applications," Kan said.

Adjustable-rate loan activity increased to 7.6% from 7% of total applications, while the share of Federal Housing Administration-guaranteed loans increased to 10.3% from 10.1% the week prior.

The share of applications for Veterans Affairs-guaranteed loans decreased to 9.8% from 10.1% and the U.S. Department of Agriculture/Rural Development share of total applications 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) remained unchanged at 5.11%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100), the average contract rate decreased 7 basis points to 4.94%.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased 1 basis point to 5.08%. For 15-year fixed-rate mortgages the average increased 5 basis points to 4.55%.

The average contract interest rate for 5/1 ARMs decreased to 4.33% from 4.47%.