Attributed to the latest rise in interest rates, mortgage application volume dropped significantly the week of Oct. 8, 2018. Overall volume decreased 7.1 percent week-over-week.
Additionally, total volume decreased 15 percent annually. Applications to refinance a home loan dropped 33.5 percent annually, and 9 percent over the previous week, CNBC reports. The new CEO of the Mortgage Bankers Association, Robert Broeksmit, says of the diminishing volume and sales, "Well of course I'm concerned, but I'm optimistic because the economy is so strong and the Millennials are out buying houses and the demand is so high. We do have to work on the supply side," adding, "I think what you'll see is as the rates continue to tick up, home price appreciation, the pace will slow, and there will be an equilibrium over time."
Rates have moved 22 basis points higher in the past four weeks and have jumped 96 points in the past year. With fewer borrowers now able to benefit, refinance volume, which had been the majority of mortgage business following the recession, fell to 38.1 percent of total applications from 39 percent the previous week. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased to its highest level since February 2011, 5.10 percent, from 5.05 percent, with points increasing to 0.55 from 0.51 (including the origination fee) for loans with 20 percent down payments.