A 5 basis point drop in conforming mortgage rates boosted loan refinance application volume this week, but overall activity was down from seven days' prior, the Mortgage Bankers Association said.
Its Market Composite Index found application activity inched 0.3% lower on a seasonally adjusted basis from seven days prior and fell 0.2% on an unadjusted basis for the period ended Oct. 17.
The Refinance Index, however, was 4% higher when compared to the Oct. 10 survey and at levels 81% above the same week in 2024, fueled in part by adjustable-rate mortgage activity.
"The lowest mortgage rates in a month spurred an increase in refinance activity, including another pickup in ARM applications," said Joel Kan, the MBA's vice president and deputy chief economist, in a press release.
The news was not as good for purchase application volume, which was down 5%, both on an adjusted and an unadjusted basis. Compared with a seasonally similar period
"While buyers have tended to be ultraresponsive to rate decreases, it wouldn't be surprising if some are choosing to hold off on homebuying for now," Kate Wood, lending expert at Nerdwallet, in a statement regarding this week's survey. "Folks feeling the pinch of higher prices and the anxiety of an uncertain job market probably aren't looking to make major financial commitments."
A 6% increase in conventional applications and a 12% surge in their Federal Housing Administration counterparts drove the rise in the Refinance Index.
"Borrowers remain attentive to these opportunities to lower their monthly mortgage payment," Kan said.
However, refinances of Veterans Affairs-guaranteed mortgages, whose
However, refinances of Veterans Affairs-guaranteed mortgages, "bucked the trend and were down 12%," he added. The VA's
The overall refinance share grew to 55.9%, from 53.6% a week ago.
Even with the drop in fixed rates, ARM volume and share both increased this past week. Applications submitted increased by 16%, while the product now makes up 10.8% of total volume. The rate for the hybrid ARM the MBA tracks, which is fixed for five years before adjusting, was about 80 basis points lower than the conforming rate, Kan noted. For the past week it was down to 5.55% from 5.63%.
FHA apps had a 21.8% share this week, versus 20.5% for the period ended Oct. 10, while VA fell to 13.5% from 14.5% and U.S. Department of Agriculture volume fell to 0.3% from 0.4%. The USDA sector has been disproportionately impacted by the government shutdown.
The average rate for conforming mortgages, loans with balances of $806,500 or lower, fell to 6.37% from 6.42%. Jumbo mortgage interest rates fell to 6.39% from 6.47%, while FHA rates fell to 6.12% from 6.19%.
Rates for the 15-year FRM fell by just 3 basis points, to 5.74% from 5.77% last week.
