The recent spike in mortgage interest rates reduced home purchase application activity last week, contributing to a 10.1% decline in total activity, according to the Mortgage Bankers Association.
The MBA's Weekly Mortgage Applications Survey for the week ending Sept. 20 found that the refinance index decreased 15%
Meanwhile, the seasonally adjusted purchase index decreased 3% from one week earlier; on an unadjusted basis it was down 4%.
This represents a change in direction for the purchase index. While mortgage rates rose during the seven-day period ended Sept. 13, purchase applications were up 6% on a seasonally adjusted basis from the prior week.
"U.S. Treasury yields trended downward over the course of last week, as the Federal Reserve meeting highlighted the elevated uncertainty in the economic outlook. However, despite falling yields, mortgage rates ticked up again and have risen 20 basis points over the past two weeks," Joel Kan, the MBA's associate vice president of economic and industry forecasting, said in a press release. "The increase in rates led to fewer refinances, and activity has now dropped 17% over the last two weeks."
The refinance share of mortgage activity decreased to 54.9% of total applications from 57.9% the previous week.
"Purchase applications also decreased, likely related to the two-week jump in rates, but still remained 9% higher than last year. The recent data on increased existing-home sales and new residential construction points to the underlying strength in the purchase market this fall," Kan added.
Adjustable-rate mortgage activity increased to 5.1% from 5% of total applications and the share of Federal Housing Administration-insured loan applications increased to 11.4% from 10.9% the week prior.
The share of applications for Veterans Affairs-guaranteed loans increased to 13.1% from 12.7% and the U.S. Department of Agriculture/Rural Development share remained unchanged from 0.6% the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) increased 1 basis point to 4.02%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350), the average contract rate decreased 1 basis point to 4%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased 1 basis point to 3.9%. For 15-year fixed-rate mortgages, the average increased 4 basis point to 3.46%. The average contract interest rate for 5/1 ARMs decreased to 3.39% from 3.54%.
