September Sees Slight Uptick in Purchase Applications

Mortgage application volume for September shows borrowers may be adjusting to the higher interest rate environment, according to the latest analysis from ""Capital Economics"":https://www.capitaleconomics.com/.

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Using weekly data released by the ""Mortgage Bankers Association"":http://mba.org/default.htm (MBA), Capital Economics economist Paul Diggle calculated a 7.7 percent drop in mortgage applications from August to September. For just the week ending September 27, MBA reported a 0.4 percent decline.

Refinance volume continued to sink, though the pace keeps slowing from month to month. For September, refinance applications were down 13.0 percent month-over-month [COLUMN_BREAK]

compared to 13.7 percent in August and 24.2 percent in July.

""The weekly data reveals that remortgaging applications actually increased in the final three weeks of the month--it's just that levels in August were higher,"" Diggle explained. ""But the bottom line is that the remortgaging boom is well and truly behind us.""

Refinance applications increased 3 percent in the month's final full week, MBA reported.

Meanwhile, applications for home purchases rose 1.3 percent in September, the first gain in three months. MBA's seasonally adjusted Purchase Index was down 6 percent for the week ending September 27, however--demonstrating some amount of reluctance still left in potential borrowers.

""Admittedly, applications for home purchase are only 1.8 percent above their level from this point last year and are very low by past standards. But the slight rise in September may indicate that borrowers are realising what we have long stressed: that mortgage rates remain very low in an historical context and affordability is favourable,"" Diggle said.

On the other hand, ""It is also possible that new buyers are now resigned to the fact that rates won't drop back to the ultra-low levels from the turn of the year,"" he added.