Mortgage Bankers Association

Another fall in interest rates spurred a gain in activity, but volumes are still almost 70% off levels from 12 months ago, the Mortgage Bankers Association said.

The decline in loan activity and softening prices also helped drive down builder sentiment for the 11th month in a row.

Easing interest rates pushed purchases up, with their average loan size also declining to its lowest point since early 2021, but refinances fell again.

Jumbo offerings continued to tail off, offsetting a small gain in the availability of government-backed loans, according to the Mortgage Bankers Association.

But refinances dwindled further and helped drive overall volumes to a slight decline last week.

High interest rates and affordability concerns continue to suppress purchase demand, though, leading overall numbers down again last week, the Mortgage Bankers Association reported.

Ongoing weakness in housing markets and the economy has now driven purchase activity to its lowest level since 2015, while overall application numbers decreased for the 10th time in 11 weeks.

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.

Lenders pulled back on government-refinance programs and products for lower-credit score borrowers, pushing loan availability down for the seventh month in a row, the Mortgage Bankers Association said.

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.

Activity is coming in at or below 2020 levels according to reports from the Mortgage Bankers Association and Redfin.

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.

Loan availability also took its steepest monthly dive since the first months of the coronavirus pandemic, with jumbo products falling off by more than 13%, according to the Mortgage Bankers Association.