Mortgage rates rose again last week, pulling demand from both the refinance and purchase markets. Total mortgage application volume dropped 10.8% compared to the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances — $766,550 or less — increased to 6.81% from 6.73%, with points decreasing to 0.68 from 0.69, including the origination fee, for loans with a 20% down payment.
“Applications decreased for the sixth consecutive week, with purchase activity falling to its lowest level since mid-August and refinance activity declining to the lowest level since May,” wrote Joel Kan, an MBA economist, in a release.
Applications to refinance a home loan, which are most sensitive to weekly rate moves, fell 19% for the week but were 48% higher than the same week one year ago. Last year at this time, the 30-year fixed rate was 80 basis points higher.
“The average loan size on a refinance application dropped below $300,000, as borrowers with larger loans tend to be more sensitive to any given changes in mortgage rates,” Kan added.
Applications for a mortgage to purchase a home decreased 5% for the week and were just 2% higher than the same week one year ago. Homebuying activity has picked up over the past few months, as more supply comes on the market and home prices ease slightly. Mortgage rates, however, are pricing some buyers out again, and concern over the economy and the election may have some sitting on the sidelines right now.
Mortgage rates were essentially flat to start this week, and whatever the results, or nonresults of the election, will surely play into recent volatility. In addition, the Federal Reserve will announce its latest rate decision on Thursday.