Mortgage Demand Hits Lowest Level Since July Amid Higher Rates

Key Takeaways

• A near 7% drop in mortgage application volume sent demand to its lowest levels since July.
• Mortgage rates remained unchanged this week but are still higher than the lows seen in September.
• While refinancing and purchase activity were both lower this week, purchase application volume remained higher than last year’s levels, showing continued home buying activity.

Mortgage demand dropped again last week despite interest rates for home loans remaining unchanged.

The 30-year, fixed-rate mortgage remained unchanged at 6.52%, according to the Mortgage Bankers Association (MBA) survey for the week ending Oct. 18. Application volume decreased by 6.7% on the week to hit its lowest levels since July as mortgage lenders received fewer applications for both purchases and refinancing than the prior week. 

While purchasing was down on the week, it's still higher than last year’s levels. It's the fifth straight week that purchasing activity was stronger than last year.

“Even though rates have been on a recent upswing, they are over a full percentage point lower than a year ago, which has kept some homebuyers in the market,” said Joel Kan, MBA vice president and deputy chief economist.

An increase in inventory is helping matters, with Realtor.com reporting that there were 34% more active listings in September than a year ago, despite sales remaining slow.

“For-sale inventory has started to loosen, and home-price growth has eased in some markets, providing more options for buyers in combination with these lower rates,” Kan said.

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