Mortgage rates have been consistently low recently, but according to MBA's weekly survey, that may be starting to change.
Overall, rates are now the highest they have been since late September. During the week ending on Oct. 16, 2020, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $510,400 or less increased to 3.02% from 3.00% the previous week. Rates for 30-year fixed-rate mortgages with large loan balances greater than $510,400 increased slightly more to 3.33% from 3.30% the week before.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA stayed the same from the previous week at 3.12%. However, the average contract interest rate for 15-year fixed-rate mortgages rose to 2.61% from last week’s rate of 2.59%. The average contract interest rate for 5/1 ARMs also increased to 2.86% from 2.63% the week before.
“Despite the uptick in rates, refinance activity held steady, with FHA refinance applications posting a 17.6 percent increase, helping to offset declines in the other loan types," MBA's Associate Vice President of Economic and Industry Forecasting, Joel Kan, said.
During the same week ending on October 16, the mortgage loan application volume decreased 0.6% from on a seasonally adjusted basis from one week before. The Purchase Index decreased 2% on a seasonally adjusted basis from the previous week. The Refinance Index, however, went up by 0.2% from the week prior and was 74% higher than the same week in 2019.
"Homebuyer demand remains strong this fall, but purchase applications did decrease 2 percent, with both conventional and government purchase activity taking a step back,” Kan said. “Given the ongoing housing market recovery and low rate environment, both purchase and refinance applications remained robust compared to a year ago, rising 26 percent and 74 percent, respectively."