Mortgage applications

The Fed's interest rate hikes are meant to tame inflation, but the secondary impacts on housing could give the central bank a reason to pump the brakes.

The mortgage market is reeling from the central bank's strategy of raising rates and reducing its holdings of mortgage-backed securities. Lenders face the worst headwinds in more than a decade.

Higher interest rates are driving borrowers to adjustable-rate loans, which saw close to a 13% share in weekly activity, the highest since 2008.

Softening prices have yet to lead to a turnaround in purchase activity, even as the average loan size fell under $400,000.

Decline was largely driven by a large dip in cash-out refinance locks.

The recent spike in interest rates has also led to elevated ARM activity, which accounted for over 10% of all applications.

The average purchase loan amount rose as a brief increase in demand for government-sponsored loan programs cooled.

Applications for these federal-backed loans headed upward after the Labor Day holiday but were offset by slowing conventional activity, sending overall volumes down for a fifth consecutive week, according to the Mortgage Bankers Association.

Declines in both purchases and refinances contributed to fractionally lower activity, as rising interest rates provided no relief.

Purchases have dropped in the last eight out of the last nine MBA weekly surveys, but decreased competition is leading to a pickup in the share of FHA originations.

Government-backed applications picked up despite rising rates last week, but a decline in conventional loans drove overall volumes down.

Numbers decreased for both purchases and refinances, which also saw the slowest pace of activity in over 20 years.

But volumes are still at least 80% lower from a year ago, while mortgage applications overall came in flat.

Refinances inched up 2% as interest rates dipped, but accounted for only 31% of activity, compared to two-thirds a year ago.

Average purchase sizes have also fallen by almost 11% after reaching a record high this spring.

Alternative data verifications used in non-qualified mortgage underwriting have increasingly been used by government-sponsored enterprises in response to expansive Biden-era housing goals, volatile rates and evolving technology.

Purchases and refinances both came in lower, with overall volumes 60% below numbers from a year ago.

Although refinances picked up after the July 4th holiday, they failed to offset a larger decline in purchases.

Average purchase-loan amounts shrank for the second week in a row and are currently 12% below their record size in March.

Overall mortgage volumes flattened last week, but average loan amounts, particularly for purchases, are shrinking according to the Mortgage Bankers Association.