Mortgage demand drops 5.3% as 30-year rate falls to 7.41% — SkimNews
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- Total mortgage application volume fell 5.3% last week compared with the previous week, according to the Mortgage Bankers Association's seasonally adjusted index, despite the first rate drop in over two months.
- The average contract rate on 30-year fixed-rate mortgages (conforming balances of $832,750 or less) dropped to 7.41% from 7.50%, with points falling to 0.75 from 0.83 for loans with a 20% down payment.
- MBA economist Joel Kan said lower rates were not enough to boost application activity, as both purchase and refinance applications continued to decline.
- Refinance applications fell just 2% week-to-week but remained 59% lower than the same week one year ago; rates are now over a full percentage point higher than a year ago, leaving a very small pool of borrowers who can benefit from refinancing.
- Purchase mortgage applications dropped a steeper 7% for the week and were 18% lower year-over-year, with buyers reacting more to the overall higher rate level than to the weekly move.
- The adjustable-rate mortgage (ARM) share held steady at 10.5%, as ARM rates remained almost a full percentage point lower than the 30-year fixed rate, giving qualified borrowers a lower-rate option to buy a home.
- The National Association of Realtors reported a sharp drop in September pending home sales — measured by signed contracts — showing the real-time impact of rising rates during the month, with rates remaining at that higher level in October.
Why it matters: With the 30-year fixed rate at 7.41% — over a full percentage point higher than a year ago — buyers and refinancers are responding to the elevated level, not the weekly direction. Refinance demand is 59% below last year, meaning only a much larger rate decline will meaningfully revive activity, and the pending-home-sales drop confirms September softness is carrying into October.
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