Mortgage Applications Aren't Ready to Rebound Just Yet

Mortgage applications continued to decline even as mortgage rates finally moved lower. The Mortgage Bankers Association (MBA) reported a 5.3% drop in total application volume for the week ending October 16, despite the first weekly decline in mortgage rates in more than two months. The average 30-year fixed mortgage rate fell to 7.41% from 7.50% the previous week. That improvement wasn't enough to revive demand, with both purchase and refinance applications moving lower. The seasonally adjusted Purchase Index fell 7% for the week and was 18% below year-ago levels . Refinances fared somewhat better, declining 2%, though activity remained 59% lower than a year earlier. “Purchase applications fell 18 percent behind last year's pace, as higher rates are pricing buyers out of the market,” said MBA's Joel Kan, who also noted that adjustable-rate mortgages remain an option for qualified borrowers looking for lower rates. ARMs held steady at 10.5% of applications , with rates nearly a full percentage point below the 30-year fixed average. The refinance share of total applications increased to 39.0% from 37.7% the previous week. That shift came despite the decline in refinance volume, reflecting the steeper drop in purchase applications. Mortgage Rate Summary: 30yr Fixed: 7.41% (from 7.50%) | Points: 0.75 (from 0.83) 15yr Fixed: 6.73% (from 6.87%) | Points: 0.73 (from 0.90) Jumbo 30yr: 7.33% (from 7.49%) | Points: 0.60 (from 0.70) FHA: 7.13% (from 7.19%) | Points: 1.15 (from 1.21) 5/1 ARM: 6.46% (from 6.54%) | Points: 1.11 (from 1.13)