Mortgage applications rise despite increase in interest rates: Massachusetts Homebuyers Homeowners 

 Mortgage applications rose 0.3 percent on a week over week, seasonally adjusted basis in the week ended Oct. 22, 2021 while the average 30 year fixed mortgage rate rose seven basis points to 3.30 percent, the Mortgage Bankers Association said, citing its Market Composite Index. The average contract interest rate for a 15 year fixed rate mortgage rose to 2.59 percent from 2.54 percnet. The 15 year and 30 year rates represented the highest levels for those home loan products in eight months, MBA Associate Vice President of Economic and Industry Forecasting Joel Kan said in a press release.

On an unadjusted basis, the market composite index, which measures mortgage loan application volume, rose 0.2 percent. The refinance index, meanwhile, slid 2 percent from the previous week and was down 9 percent from the same week a year ago. The refinance share of mortgage activity decreased to 62.2 percent of total applications from 63.3 percent the previous week. “The increase in rates triggered the fifth straight decrease in refinance activity to the slowest weekly pace since January 2020,” Kan said. “Higher rates continue to reduce borrowers’ incentive to refinance.” The adjustable-rate mortgage share of activity decreased to 3.1 percent of total applications.

The FHA share of total applications increased to 10.4 percent from 10.2 percent in the preceding week, while the VA share of applications rose to 10.6 percent from 10.4 percent. The USDA share of applications was flat, at 0.5 percent. The seasonally adjusted purchase index rose 4 percent from the previous week, while the unadjusted purchase index was up 3 percent on a weekly basis and down 9 percent on an annual basis. “Purchase applications picked up slightly, and the average loan size rose to its highest level in three weeks, as growth in the higher price segments continues to dominate purchase activity,”

Kan added, noting that both new- and existing-home sales in September were at their fastest pace since early 2021, but first-time homebuyers are accounting for a declining share of activity. “Home prices are still growing at a rapid clip, even if monthly growth rates are showing signs of moderation, and this is constraining sales in many markets, and particularly for first-timers.”

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