– Mortgage applications decreased 1% for the week ending Oct. 20 compared to the week prior
– Mortgage rates are still hovering around 8%
– Higher mortgage rates are keeping prospective homebuyers out of the market and suppressing refinance activity
– ARM share inched up to 9.5%, its highest level since November 2022
– FHA loan activity increased to 15.2% from 14.8%
– VA loan activity decreased to 10.5% from 10.7%
– USDA loan activity decreased to 0.4% from 0.5%
– Volatile mortgage rates have impacted the housing industry
– Trade groups are calling on the Federal Reserve to provide clarity about its rate path and plans for the mortgage-backed securities portfolio
– The trade groups want the Fed to make clear statements that they do not contemplate further rate hikes and will not sell off any MBS holdings until the housing finance market has stabilized and mortgage-to-Treasury spreads have normalized.
With mortgage rates still hovering around 8%, mortgage applications decreased 1% for the week ending Oct. 20 compared to the week prior, according to weekly mortgage application data from the Mortgage Bankers Association.
“Mortgage activity continued to stall, with applications dipping to the slowest weekly pace since 1995,” Joel Kan, MBA’s vice president and deputy chief economist, said. “These higher mortgage rates are keeping prospective homebuyers out of the market and continue to suppress refinance activity.”
Rates have now risen for seven consecutive weeks, amounting to a 69 basis points increase, Kan added. Meanwhile, the ARM share inched up to 9.5%, its highest level since November 2022.
The share of Federal Housing Administration (FHA) loan activity inched up to 15.2% from 14.8% for the week ending Oct. 20. The share of Department of Veterans Affairs (VA) loan activity was 10.5%, down from 10.7% the week prior while the share of Department of Agriculture (USDA) loan activity decreased to 0.4% from 0.5%.
Volatile mortgage rates have hit the housing industry hard, prompting industry trade groups to call on the Federal Reserve to provide clarity about its rate path. Earlier this month the MBA, National Association of Realtors and National Association of Home Builders called on the Federal Reserve to provide market certainty about the Fed’s rate path and its plans for the mortgage-backed securities (MBS) portfolio.
The trade group wants the Fed to make two clear statements: that the Fed does not contemplate further rate hikes; and the Fed will not sell off any of its MBS holdings until and unless the housing finance market has stabilized and mortgage-to-Treasury spreads have normalized.
“We urge the Fed to take these simple steps to ensure that this sector does not precipitate the hard landing the Fed has tried so hard to avoid,” the trade groups wrote in a letter to the Fed.
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