The pain in the mortgage industry continues as total mortgage demand falls 4.5% for the week and is now at a 25-year low, according to the Mortgage Bankers Association weekly survey.
- Purchase demand fell 4% from last week and is now down 38% when compared to last year.
- Refinance demand dropped 7% from last week and is now down 86% when compared to last year.
Breaking It Down. The refinance share of mortgage activity decreased to 28.3% of total applications while the adjustable-rate mortgage share of activity increased to 12.8% of total applications.
Closer To Seven. Mortgage rates continue to inch closer to 7.0% with the 30-year fixed jumping 11 basis points to 6.94% for the week ending October 14th. Rates are now up 370 basis points when compared to last year.
- The 15-year fixed actually fell 3 basis points to 6.09% and the 5/1 ARM was up 9 bips to 5.65%.
Analysis. Joel Kan, MBA economist, said with rates reaching 20-year high ARMs are getting more attractive. “Mortgage applications are now into their fourth month of declines, dropping to the lowest level since 1997, as the 30-year fixed mortgage rate hit 6.94 percent – the highest level since 2002…With rates at these high levels, the ARM share rose to 12.8 percent of all applications, which was the highest share since March 2008. ARM loans continue to remain a viable option for borrowers who are still trying to find ways to reduce their monthly payments.”