Mortgage demand sinks another 6.7%

Stubbornly high rates have hindered mortgage demand, but at least it’s better than it was a year ago. Mortgage applications decreased 6.7% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) weekly applications survey for the week ending Oct. 18.

The Market Composite Index, a measure of mortgage loan application volume, decreased 7% on an unadjusted basis. The refinance index decreased 8% from the previous week and was still 90% higher than the same week one year ago (when rates were hovering near 8%). The seasonally adjusted purchase index decreased 5% from one week earlier. The unadjusted purchase index was 3% higher than the same week one year ago.

“Mortgage rates saw mixed results last week, but the 30-year fixed rate remained unchanged at 6.52%. Application activity decreased to its lowest level since July, as both purchase and refinance applications saw declines,” said Joel Kan, MBA’s vice president and deputy chief economist.

Added Kan: “Purchase applications continued to run stronger than last year’s pace for the fifth consecutive week. 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. 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.”

Refinances comprised 45.7% of applications, down from 46.5% a week earlier.

Higher rates are keeping the home sales market subdued, with limited year-over-year gains from last year’s moribund market.