Mortgage demand fell for the third week in a row with a 2.0% decline for the week ending October 7th, according to the Mortgage Bankers Association’s weekly survey.
- Purchase index declined 2.0% for the week and is now down 39% when compared to one year ago.
- Refinance index was down 2.0% for the week and is now down 86% when compared to one year ago.
Activity. The refinance share of mortgage activity remained unchanged at 29% of total applications. The adjustable-rate mortgage share of activity decreased to 11.7% of total applications.
Rates Keep Climbing. After three weeks in a row of quarter-point jumps, the pace has slowed but it is still increasing with the 30-year fixed up to 6.81%, this is up 6 basis points from last week and is now up 373 basis points from one year ago.
- The 15-year fixed was up 16 basis points to 6.12% and the 5/1 ARM is up 20 basis points to 5.56%.
Analysis. Mike Fratantoni, MBA’s Senior Vice President and Chief Economist, said the jobs report was both good and bad for mortgage demand. “Application volumes for both refinancing and home purchases declined and continue to fall further behind last year’s record levels. The news that job growth and wage growth continued in September is positive for the housing market, as higher incomes support housing demand. However, it also pushed off the possibility of any near-term pivot from the Federal Reserve on its plans for additional rate hikes.”
BOTTOM LINE: Mortgage demand is unlikely to a see positive week until rates begin to fall.