U.S. mortgage applications fell last week as mortgage rates jumped to their highest since July, according to a Mortgage Bankers Association (MBA) report released Wednesday.
The market composite index, a measure of mortgage loan application volume, fell 0.1% on a seasonally adjusted basis for the week ending Oct. 28. On an unadjusted basis, the index was off 1% compared to the previous week.
“Mortgage applications were essentially flat last week as rates increased for the fourth time in five weeks, driven by bond market volatility in advance of the presidential election and the next FOMC (Federal Open Market Committee) meeting,” Joel Kan, MBA’s vice president and deputy chief economist, said in a statement.
“After a brief burst of activity in September when rates were almost 60 basis points lower, overall applications have declined 27 percent, driven by a pullback in refinances,” he said. “Government refinances accounted for a large part of the decrease, dropping 12 percent over last week.”
The average contract interest rate for 30-year fixed-rate mortgages surged to 6.73% last week, from 6.52% the previous week.
The rate for 15-year fixed-rate mortgages, meanwhile, rose to 6.27% from 5.98%.
“While near-term purchase application activity has weakened, we continue to expect housing demand from younger homebuyers to support purchase growth over the next few years as for-sale inventory loosens gradually,” said Kan.
The MBA survey covers more than 75% of U.S. retail residential mortgage applications.