Rates Drive Increase in ARM Application Volume

A reduction in adjustable mortgage rates led some cost-stressed borrowers to forsake fixed-rate security and drove mortgage application volume up slightly during the week ended October 6. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of that volume, increased 0.6 percent on a seasonally adjusted basis after a 6.0 percent drop a week earlier. On an unadjusted basis, the Index increased 1.0 percent. The Refinance Index rose 0.3 percent compared to the prior week and was 9.0 percent lower than the same week one year ago. The refinance share of mortgage activity dipped to 31.6 percent of total applications from 31.7 percent. [refiappschart] The Purchase Index was 1 percent higher than a week earlier on both a seasonally adjusted and an unadjusted basis. It was 19 percent below its level during the same week in 2023. [purchaseappschart] “While most mortgage rates increased last week, rates on ARMs [adjustable-rate mortgages] declined, leading to an increase in ARM volume and an increase in overall applications. The level of ARM applications increased by 15 percent over the week, bringing the ARM share up to 9.2 percent of all applications , the highest share since November 2022. The yield curve has become less inverted in recent weeks and ARM pricing has certainly improved,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “The 30-year fixed mortgage rate is at 7.67 percent – the highest level since 2000 and 40 basis points higher than a month ago. Application activity remains depressed and close to multi-decade lows, with purchase applications still almost 20 percent behind last year’s pace. Refinance applications also continue to be limited, and the average loan size has fallen to its lowest level since 2017.”

October 11, 2023 Download our Mobile App: Download our Mobile App: Housing News Rates Drive Increase in ARM Application Volume A reduction in adjustable mortgage rates led some cost-stressed borrowers to forsake fixed-rate security and drove mortgage application volume up slightly during the week ended October 6. The Mortgage Bankers Association (MBA) said its Market... (read more) Mortgage Rate Watch Mortgage Rates Inch Lower After Tuesday's Much Larger Drop The holiday-shortened week began yesterday with a substantial decline in average mortgage rates. Caveats abound, however. They include things like the bond market making up for an extra day of trading due to the bank holiday, the flare up... (read more) MBS Commentary More Gains Despite Higher Inflation Data This morning's only upper tier economic report, The Producer Price Index (PPI), came out a bit hotter than expected with a fairly significant revision to previous months. The revision brought the year-over-year core level to 2.5 last month vers... (read more) Rob Chrisman Internal Audit, Marketing, Valuation, Processing Tools; Credit Cost Changes, Non-QM Back in the News “My dog is really worried about the rising price of groceries, with a can of dog food now costing $3. That’s $21 in dog money.” As I travel and speak with originators, besides the regulatory environment being a concern (the latest example being the C... (read more) Mortgage Rates 30 Yr. Fixed Rate 7.60% -0.02% Rate Change Points Mortgage News Daily 30 Yr. Fixed 7.60% -0.02 0.00 15 Yr. Fixed 6.99% -0.01 0.00 30 Yr. FHA 7.08% -0.02 0.00 30 Yr. Jumbo 7.85% 0.00 0.00 5/1 ARM 7.05% -0.02 0.00 30 Yr. VA 7.09% -0.03 0.00 Updates Daily - Last Update: 10/11 15 Yr. Fixed Rate 6.99% -0.01% Rate Change Points Freddie Mac 30 Yr. Fixed 7.49% +0.18 0.00 15 Yr. Fixed 6.78% +0.06 0.00 Updates Weekly - Last Update: 10/5 Rate Change Points Mortgage Bankers Assoc. 30 Yr. Fixed 7.41% +0.10 0.71 15 Yr. Fixed 6.73% +0.11 1.17 30 Yr. Jumbo 7.34% +0.02 0.78 Updates Weekly - Last Update: 9/27 MBS / Treasuries UMBS 30YR 6.0 98.58 +0.36 Price / Yield Change MBS UMBS 6.0 98.58 +0.36 GNMA 6.0 99.16 +0.39 Pricing as of: 10/11 5:31PM EST 10 Year US Treasury 4.5620 -0.0950 Price / Yield Change US Treasury 2 YR Treasury 4.988 +0.021 5 YR Treasury 4.582 -0.032 7 YR Treasury 4.597 -0.065 10 YR Treasury 4.562 -0.095 30 YR Treasury 4.700 -0.138 Pricing as of: 10/11 5:31PM EST Latest Video Housing market's sensitivity to rates kept the Fed from hiking further, say... Dovish Fed remarks 'the catalyst' for recent market rally, says Defiance ET... Inflation could be back to its target by this time next year, says Moody's ... JPMorgan's Jordan Jackson: Cannot rule out another rate hike this year Around the Web Eye on Housing Characteristics of Recent Home Buyers Eye on Housing Mortgage Activity Increases Despite Rise in Interest Rates forexlive FOMC minutes: Participants judged that risks had become more two-sided CNBC Wholesale inflation rose 0.5% in September, more than expected CNBC Fed officials see 'restrictive' policy staying in place until inflation eases, minutes show CFPB CFPB Issues Guidance to Halt Large Banks from Charging Illegal Junk Fees for Basic Customer Service Calculated Risk Blog 2nd Look at Local Housing Markets in September Marketwatch 2-Treasury yield ends at lowest level in over a month on prospect of no more Fed rate hikes Eye on Housing Residential Building Wage Growth Slowing Eye on Housing Total Credit Outstanding Declines as Interest Rates Climb Reuters Fed's Kashkari: Soft-landing in view, but risks remain Calculated Risk Blog More Employment Graphs: Duration of Unemployment, Unemployment by Education, Diffusion Indexes CNBC Treasury yields mixed as investor attention turns to key inflation reports

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