Mortgage loan application volume fell another 2% last week, according to the Mortgage Bankers Association’s weekly survey.
Interest rates rose to 6.81%, their highest point since 2006.
The adjusted Market Composite Index, a measure of mortgage loan application volume, dropped by 2%.
The adjusted purchase index fell 2%, while the unadjusted purchase index decreased 2% and was 39% lower YOY.
The refinance index dropped by 2% and was 86% lower than the same time last year. Refis made up 29% of total applications.
The ARM share of activity dipped slightly from last week as the 5/1 interest rate jumped 20 basis points from 5.36% to 5.56%.
“The ARM share of applications remained quite high at 11.7%– just below last week’s level,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist.
“Application volumes for both refinancing and home purchases declined and continue to fall further behind last year’s record levels. The news that job growth and wage growth continued in September is positive for the housing market, as higher incomes support housing demand. However, it also pushed off the possibility of any near-term pivot from the Federal Reserve on its plans for additional rate hikes.”
The U.S. added 263,000 jobs in September, down from August’s 315,000 but still a strong showing.
Average hourly earnings climbed by 5% YOY and 0.3% from the month prior.
Fed officials have suggested that rate hikes will continue until price stability is certain despite these gains.
“These data do not change the near-term course of monetary policy,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, wrote of the employment report.
The FHA share of total applications rose from 13.2% to 13.5%.
The VA share rose from 10.7% to 10.9%, while the USDA dropped from 0.6% to 0.5%.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased from 6.75% to 6.81%.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances rose from 6.14% to 6.25%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased from 6.60% to 6.61%, and for 5/1 ARMs rose from 5.36% to 5.56%.
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