Mortgage App Volume Falls for Third Straight Week

The Mortgage Bankers Association (MBA) reports that overall mortgage application volume decreased 2.1% week-over-week, for the week ending October 27, 2023.

The MBA’s Refinance Index decreased 4% from the previous week, and was 12% lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 1% from one week earlier. The unadjusted Purchase Index decreased 2% compared to the previous week, and was 22% lower than the same week one year ago.

“Mortgage applications declined for the third straight week as mortgage rates remained elevated, with all rates around 30 basis points higher than they were a month ago. The 30-year fixed rate dipped slightly to 7.86%, but remained close to 23-year highs, and has been above the 7% level since early August 2023,” said Joel Kan, MBA’s VP and Deputy Chief Economist. “The impact of higher rates continued to be felt across both purchase and refinance markets. Purchase applications decreased to their lowest level since 1995, and refinance applications to the lowest level since January 2023. Applications for government loans saw much larger weekly declines than conventional, with government purchase applications down 3%, and refinances down 9%."

The MBA reports that the refinance share of mortgage activity decreased to 31.2% of total applications from 31.4% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 10.7% of total applications.

By loan type, the FHA share of total applications decreased to 14.7% from 15.2% the week prior. The VA share of total applications decreased to 10.1% from 10.5% the week prior. The USDA share of total applications increased slightly to 0.5%, up from 0.4% the week prior.

"As higher rates continue to impact affordability and purchasing power, ARM loans increased almost 10% last week, and continued to gain share, growing to 10.7% of all applications,” added Kan.

According to a new Bankrate report, U.S. home prices continue to edge near record highs, as mortgage rates skyrocketed to their highest levels since 2000. Bankrate surveyed U.S. adults to get a handle on how Americans are feeling about the housing market, which revealed nearly half of all Americans feel that now is a bad time to buy a home, and nearly one-third feel they will never be able to afford their own dream home.

And despite the high rate environment and price points continuing to shut out potential buyers, a bit of an uptick in the nation’s housing inventory has been reported by Redfin, as nationwide, 30.6% of U.S. single-family homes for sale in Q3 were new construction—marking the highest share of any third quarter on record, up from 28.9% one year earlier, and 25% two years earlier. Newly-built homes have taken up a growing share of for-sale housing inventory, partly because homebuilding has increased and partly because the number of existing homeowners putting their houses up for sale has decreased as mortgage rates have surged to a 23-year high of roughly 8%.