That refi mini boom seems all but dead now that mortgage rates are rising
A 60 basis point rise in mortgage rates in October has choked demand for mortgages, especially for refinancings, the latest survey data from the Association of Mortgage Bankers.
Mortgage applications fell 0.1% overall from a week earlier, according to the weekly MBA application survey for the week ending October 25.
The Market Composite Index, a measure of mortgage applications, fell 0.1% on a seasonally adjusted basis from a week earlier, but fell 1% on an unadjusted basis.
Due to the rise in mortgage rates, the refinancing index fell 6% from the previous week and 43% from the previous month, although it was 84% higher than a year ago when rates were closer to 8% lay. The seasonally adjusted purchasing index rose 5% from the previous week. The unadjusted purchase index was 10% higher than the same week a year ago.
“Mortgage applications remained broadly stable last week as rates rose for the fourth time in five weeks, driven by bond market volatility ahead of the presidential election and the next FOMC meeting. The 30-year fixed rate was at its highest level since July 2024 at 6.73%,” said Joel Kan, MBA deputy chief economist. “After a brief burst of activity in September, when rates were almost 60 basis points lower, overall applications fell 27%, due to a drop in refinancing. Government refinancings accounted for much of the decline, down 12% from last week.”
Can add: “Purchase requests increased compared to a holiday shortened week and were 10 percent higher than a year ago. While purchase application activity has weakened in the near term, we still expect housing demand from younger homebuyers to support purchase growth in the coming years as the inventory for sale gradually declines.”
The refinance share of mortgage activity fell to 43.1% of total applications from 45.7% the week before. The share of adjustable-rate mortgage (ARM) activity increased to 6.4% of total applications.
