The start of the fall housing market usually offers a nice bump to the mortgage business. Not this year.
Mortgage application volume fell 0.5 percent last week from the previous week. Volume on the Mortgage Bankers Association's seasonally adjusted survey is now 21.5 percent lower than a year ago.
A jump in mortgage interest rates had the biggest effect on applications to refinance a home loan. Those applications fell 4 percent for the week and are 36 percent lower than a year ago, when interest rates were nearly half a percentage point lower. Refinance demand is always highly sensitive to any weekly rate moves, and last week's was relatively large.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of up to $424,100 increased to 4.11 percent from 4.04 percent, with points remaining constant at 0.40, including the origination fee, for 80 percent loan-to-value ratio loans.
"Mortgage rates increased to their highest levels in almost a month following a relatively hawkish Fed statement last week, driving the decline in refinance activity," said Joel Kan an MBA economist. "The FOMC announced the start of its plan to reduce the size of its balance sheet and indicated plans to increase short-term rates one more time this year."
Mortgage applications to purchase a home, which are less sensitive to weekly rate moves, increased 3 percent for the week and are 4 percent higher than the same week one year ago.
"Purchase applications increased slightly last week, but were still weighed down by tight inventories of homes for sale and lingering effects from the hurricanes," Kan said.
Mortgage application volume in Florida and Texas remained well below their respective paces from earlier this year. Data on Puerto Rico is not part of the survey.