Soaring mortgage rates and a deadly hurricane helped push mortgage demand down 14.2% for the week, according to the Mortgage Bankers Association’s latest weekly survey.
- The Refinance Index plummeted 18% from the previous week and is now down 86% when compared to the same week one year ago.
- The Purchase index plummeted 13% compared with the previous week and is now down 37% when compared to the same week one year ago.
Break Down. The refinance share of mortgage activity decreased to 64.5% of total applications and the adjustable-rate mortgage share of activity remained unchanged at 3.4% of total applications.
Almost 75 Bips. Rates jumped a quarter of a point for the third week in a row. The 30-year fixed jumped 23 basis points to 6.75% for the week ending September 30th, this is 361 basis points higher than one week ago and is up 73 basis points in just three weeks!
- The 15-year fixed was up 26 basis points to 5.96% and the 5/1 ARM increased just 6 bips to 5.36%.
Analysis. Joel Kan, MBA economist, says that soaring rates have pushed mortgage demand to a 25-year low. “Mortgage rates continued to climb last week, causing another pullback in overall application activity, which dropped to its slowest pace since 1997. The 30-year fixed rate hit 6.75 percent last week – the highest rate since 2006…The current rate has more than doubled over the past year and has increased 130 basis points in the past seven weeks alone.”
BOTTOM LINE: Mortgage demand is trending lower but this was a horrible perfect storm of higher rates and a deadly storm in the hottest state in the country. It seems likely that next week will correct upward to the mean of this downward trend.