Mortgage demand drops 11% due to rising interest rates

• The interest rate for 30-year fixed-rate mortgages with conforming loan balances increased from 6.73% to 6.81%.
• Applications to refinance a home loan fell 19% for the week.
• The number of mortgage applications for purchasing a home decreased by 5% during the week.

Last week, the rise in mortgage rates caused a decline in demand for both refinancing and purchasing mortgages, resulting in a 10.8% decrease in total mortgage application volume, as per the Mortgage Bankers Association's seasonally adjusted index.

The interest rate for 30-year fixed-rate mortgages with conforming loan balances of $766,550 or less has risen to 6.81% from 6.73%, while the points have decreased to 0.68 from 0.69, including the origination fee, for loans with a 20% down payment.

Joel Kan, an MBA economist, reported that for the sixth consecutive week, there was a decrease in applications, with purchase and refinance activity reaching their lowest levels since mid-August and May, respectively.

The number of applications to refinance a home loan decreased by 19% this week, although they were 48% higher than the same week last year. At this time last year, the 30-year fixed rate was 80 basis points higher.

"As borrowers with larger loans tend to be more sensitive to any given changes in mortgage rates, the average loan size on a refinance application decreased below $300,000, according to Kan," he stated.

The number of mortgage applications for purchasing homes decreased by 5% in the current week, although it was 2% higher than the same week last year. Despite the recent increase in homebuying activity due to the availability of more supply and a slight decrease in home prices, mortgage rates are currently making it difficult for some buyers to purchase homes. Additionally, concerns about the economy and the upcoming election may be causing some individuals to delay their homebuying decisions.

This week, mortgage rates remained stable, and the election results, or lack thereof, may contribute to recent fluctuations. Furthermore, the Federal Reserve will reveal its latest rate decision on Thursday.