Applications Flat At Rates Reach 6.73%

Mortgage applications remained mostly flat last week as rates rose again ahead of the election.

The Mortgage Bankers Association’s weekly survey shows that the adjusted Market Composite Index — a measure of mortgage loan application volume — shrank by just 0.1%, slowing from the week prior’s 6.7% decline and remaining close to its lowest level since July.

Adjusted purchase applications fell by 5% on the week, while the unadjusted index was down 4% but 10% higher year-over-year.

Mortgage rates increased for the fourth time in five weeks, up to 6.73% from 6.52%. MBA VP and Deputy Chief Economist Joel Kan attributes the increase to bond market volatility before the presidential election and the next FOMC meeting.

“After a brief burst of activity in September when rates were almost 60 basis points lower, overall applications have declined 27%, driven by a pullback in refinances. Government refinances accounted for a large part of the decrease, dropping 12% over last week,” he said.

“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.”

Financial markets are pricing in potential economic shifts in 2025, leading to instability in Treasury yields, which mortgage rates follow. Government spending could change drastically depending on who wins the election, so right now analysts are just guessing at future outcomes.

More than 100 economists surveyed by Reuters predict the Central Bank will cut rates by a quarter point at its November 7th meeting.