Despite Late-Month Drop, Loan Apps Rebound in October

Mortgage application volume increased throughout October, but a substantial decline recorded in the month's final days has experts at ""Capital Economics"":https://www.capitaleconomics.com/ doubting that the trend will continue for the time being.

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Using application numbers released by the ""Mortgage Bankers Association"":http://mba.org/default.htm (MBA), Capital Economics calculated a 7.5 percent increase in applications in October, pulling activity up from a five-month streak of declines.

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The increase accompanied a nearly 30-basis point drop in average 30-year fixed rates, which led to a 14.8 percent month-over-month jump in refinance application numbers.

Applications for home purchase were weaker, falling by 3.4 percent.

On a weekly basis, numbers showed a bit more volatility. For the week ending November 1, MBA reported a 7.0 percent drop in its weekly Market Composite Index, with refinances falling 8 percent and purchases falling 5 percent.

While Capital Economics was reluctant to pin any major movements on last month's government shutdown, chief property economic Ed Stansfield ventured that the impact on consumers may be felt for some time.

""Continuing uncertainty about the debt ceiling and the outlook for monetary policy, as well as the softness of recent labour market data, help to explain the dip in mortgage demand,"" Stansfield said. ""But the favourable fundamentals facing the market point to a gradual strengthening in mortgage approvals through the course of next year.""