The 30-year fixed-rate mortgage (FRM) averaged 6.94% for the week of Oct. 20, according to the Primary Mortgage Market Survey released by Freddie Mac. The 30-year FRM was up 20 basis points from the previous week and 300 basis points higher than a year ago, when the 30-year FRM averaged 3.09%.
“Mortgage rates slowed their upward trajectory this week,” says Sam Khater, Freddie Mac’s chief economist. “The 30-year fixed rate mortgage continues to remain just shy of 7% and is adversely impacting the housing market in the form of declining demand. Additionally, home builder confidence has dropped to half what it was just six months ago, and construction, particularly single-family residential construction, continues to slow down.”
The 15-year FRM averaged 6.23% for the week of Oct. 20, an increase from 6.09% the previous week. Twelve months ago, the 15-year FRM averaged 2.33%. Five-year treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.71%, down from 5.81% the previous week, though significantly higher than a year ago when the 5-year ARM averaged 2.54%, according to Freddie Mac.
As mortgage rates have steadily increased, mortgage applications have continued to decline, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. For the week ending Oct. 14, mortgage applications decreased 4.5% from the previous week, according to the MBA. On an unadjusted basis, the Market Composite Index—a measure of mortgage loan application volume—decreased 4% compared with the previous week.
The Refinance Index decreased 7% from the previous week and was 86% lower on a year-over-year basis. The seasonally adjusted Purchase Index decreased 4% from one week earlier, according to the MBA. The unadjusted Purchase Index decreased 3% compared with the previous week and was 38% lower than the same week a year ago.
“Mortgage applications are now into their fourth month of declines, dropping to the lowest level since 1997, as the 30-year fixed mortgage rate hit 6.94%—the highest level since 2002,” says Joel Kan, MBA’s vice president and deputy chief economist. “The speed and level to which rates have climbed this year have greatly reduced refinance activity and exacerbated existing affordability challenges in the purchase market.”
The refinance share of mortgage activity for the week ending Oct. 14 decreased to 28.3% of total applications from 29% the previous week. The ARM share of activity increased to 12.8% of total applications. Kan says the ARM share was at its highest level since March 2008.
“Residential housing activity ranging from housing starts to home sales have been on downward trends coinciding with the rise in rates,” Kan says. “The current 30-year fixed rate is now well over 3 percentage points higher than a year ago, and both purchase and refinance applications were down 38% and 86% over the year, respectively.”
