Mortgage applications rise 3.4% as 30-year rate falls to 7.37%, MBA says

Mortgage applications rose 3.4% in the week ended October 23 from a week earlier, seasonally adjusted, as the average 30-year fixed rate fell to 7.37%, according to the Mortgage Bankers Association (MBA).

What happened

The MBA's Market Composite Index, its measure of mortgage application volume, increased 3.4% on a seasonally adjusted basis from the previous week. Unadjusted, the index rose 3%. The seasonally adjusted Purchase Index increased 4%, and the Refinance Index increased 3% from the previous week.

The average contract rate on 30-year fixed-rate mortgages with conforming balances ($832,750 or less) decreased to 7.37% from 7.41%, with points of 0.76 (including the origination fee) for loans with an 80% loan-to-value ratio. The rate on jumbo loans fell to 7.28% from 7.33%, and the rate on FHA-backed loans fell to 7.12% from 7.13%.

Joel Kan, the MBA's vice president and deputy chief economist, said mortgage rates declined for the second week in a row and that the 30-year rate was the lowest in three weeks. The share of applications for adjustable-rate mortgages rose to 11.3%, which Kan said was the highest in more than a year.

Why it matters

Activity remains well below last year's. The purchase index was 18% lower than in the same week a year earlier, and the refinance index was 61% lower, the MBA said. Kan said that "most homeowners still have rates much lower than prevailing market rates" and that many homebuyers have put their purchase plans on hold.

The rebound followed a 5.3% decline in the week ended October 16, when the 30-year rate fell to 7.41% from 7.5%, the MBA reported a week earlier. At that time Kan said it was "very clear that the higher mortgage rate environment has cooled the housing market this fall."

What to watch

The MBA publishes its survey weekly. Whether applications keep rising will depend on whether the 30-year rate continues to ease from 7.37%.