Mortgage applications drop as refi volume falls to an 18-year low

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Mortgage application activity decreased 3.2% from one week earlier as interest rates rose to eight-year highs and refinancings fell to an 18-year low, according to the Mortgage Bankers Association.

The MBA's Weekly Mortgage Applications Survey for the week ending Nov. 9 found that the refinance index decreased 4.3% from the previous week reaching its lowest level since December 2000. The refinance share of mortgage activity increased to 39.4% of total applications from 39.1% from one week earlier.

The seasonally adjusted purchase index decreased 2.3% from one week earlier reaching its lowest level since February 2017, while the unadjusted purchase index decreased 5% compared with the previous week and was 3% lower than the same week one year ago.

"Recent volatility in the financial markets and increasing rates continue to adversely impact mortgage application activity, even as the general economic outlook remains positive," Joel Kan, the MBA's associate vice president of economic and industry forecasts, said in a press release. "Both home purchase and mortgage refinance applications decreased over the week, driven largely by declines in conventional applications."

The 30-year conforming mortgage recorded its highest interest rate since 2010, Kan added.

Adjustable-rate loan activity decreased to 7.7% from 7.8% of total applications, while the share of Federal Housing Administration-guaranteed loans increased to 10.6% from 10.1% the week prior.

The share of applications for Veterans Affairs-guaranteed loans remained unchanged at 10.1% and the U.S. Department of Agriculture/Rural Development share remained unchanged from 0.7% the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased 2 basis points to 5.17%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100), the average contract rate increased 1 basis point to 4.98%.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased 7 basis points to 5.08%. For 15-year fixed-rate mortgages, the average increased 2 basis points to 4.57%.

The average contract interest rate for 5/1 ARMs increased to 4.45% from 4.36%.