In particular, said Mike Fratantoni, vice president of research and economics, government loan application volume is now at its lowest level since December 2007, with a 7% decline during the week ended Oct. 11. The ratio of government purchase loan apps to convention apps is at a three-year low.
Conventional purchase apps are down 4% from the prior week. On an unadjusted basis, total purchase application activity is down 1% from the same week last year.
Total application volume is up a mere 0.3% on a seasonally adjusted basis. The unadjusted refinance index is up 3%. The share of refi apps moved up to 66% from 64%.
HSH.com's Weekly Mortgage Rates Radar found the average rate for conforming 30-year fixed-rate mortgages is up five basis points to 4.39% as of Tuesday.
With the dithering over raising the debt ceiling, “will Uncle Sam become Uncle Subprime? The hope is that a deal can be reached before there are any effects on the low mortgage rates borrowers have come to rely upon," said Keith Gumbinger, vice president of HSH.com.
On the other hand, Zillow Mortgage Marketplace’s director Erin Lantz feels rates should remain steady until the government reopens and the market has more data to digest.
According to the MBA application survey, 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 4.46%, up four basis points from the previous week. Federal Housing Administration-insured loans had an average contract rate for the week of 4.16%, an increase of one basis point.
Jumbo 30-year FRM average contract rates are up six basis points to 4.51%. The MBA said the rate for the 15-year FRM is up one basis point to 3.53%.
The average contract rate for the 5/1 adjustable-rate mortgage remains at 3.25%, also the lowest since June. ARMs made up just 6% of the week’s applications.