Total mortgage application volume increased less than 1% for the week ended Oct. 18, as refinance activity fell 1% and purchase activity increased 1%, according to the Mortgage Bankers Association. Refis made up 65% of the new applications, down from 66% one week prior.
Mortgage application activity will pick up again now that the shutdown is over and interest rates are expected to remain steady, says Bill Banfield, an economist with Quicken Loans.
Purchase activity should pick up going forward, and there are millions of underwater borrowers who have not yet taken advantage of the Home Affordable Refinance Program, he adds.
The Federal Reserve might pause a little longer than many originally thought on its plans to end the taper based on recent economic data. Given that its goal is to extricate itself from directly manipulating longer term rates, it is still likely to act sooner rather than later, says Keith Gumbinger, vice president of HSH.com.
Rates should remain steady until the government reopens and the market has more data to digest, Zillow Mortgage Marketplace’s director Erin Lantz feels.
The average contract rate for the 30-year conforming FRM (MBA defines this as a loan with a balance of $417,500 or under) for the survey period is 4.39%, down seven basis points from the previous week. This is the lowest rate since June. Federal Housing Administration-insured loans had an average contract rate for the week of 4.15%, a decrease of one basis point.
Jumbo 30-year FRMs average contract rates are down eight basis points to 4.43% and the rate for the 15-year FRM is down two basis points to 3.51%.
The average contract rate for the 5/1 adjustable-rate mortgage remains at 3.25%. ARMs made up just 7% of the week’s applications.