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.