U.S. Mortgage Applications Decline as Interest Rates Rise
by:Tom Moeller
|in:Economy in Brief
Summary
- Total applications remain at lowest level since 1995.
- Applications for purchase loans & refinancing decline.
- Mortgage interest rates increase to highest level since 2000.
Mortgage applications declined 1.0% (-17.9% y/y) in the week ended October 20 after falling 6.9% in the prior week, according to the Mortgage Bankers Association Weekly Mortgage Applications Survey. Applications for loans to purchase a home decreased 2.2% (-21.5% y/y) falling 5.6% in the previous week. Applications to refinance a loan improved 1.8% (-8.3% y/y) after falling 9.9% in the prior week.
The effective interest rate on a 30-year fixed rate loan rose to 8.12% in the week ended October 20 from 7.90% in the prior week. This was the highest rate since September 2000. The effective rate on a 15-year fixed-rate loan increased to 7.44% from 7.24%. The rate on a 30-year Jumbo loan rose to 7.98% from 7.80% while the rate on the 5-year adjustable-rate mortgage rose to 7.25% from 7.07%.
The share of loans to refinance an existing loan rose to 31.4% in the week ended October 20 from 30.5% in the prior week. This is down sharply from roughly 50% when the Fed began raising its fed funds rate target in March 2022. The share of adjustable-rate loans of 9.5% compared to 9.3% in the previous week. It was the highest level since November 2022.
The average size of a mortgage loan was little changed at $362,100 in the week ended October 20. The average size of a loan to purchase a home eased 0.5% (+2.2% y/y) to $410,700, while the average size of a loan to refinance rose 3.1% (-3.9% y/y) to $246,100.
The Mortgage Bankers Association Survey covers 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver’s SURVEYS database.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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