The refi mini boom appears to be all but dead with the rise in mortgage rates

A 60 basis point increase in mortgage rates in October has curbed mortgage demand, particularly for refinances, according to the Fed's latest survey data Mortgage Bankers Association.

According to the MBA's weekly applications survey for the week ending Oct. 25, overall mortgage applications fell 0.1% compared to the previous week.

The Market Composite Index, a measure of mortgage loan application volume, fell 0.1% on a seasonally adjusted basis from the previous week, but fell 1% on an unadjusted basis.

Due to the rise in mortgage rates, the refinancing index fell 6% from the previous week and 43% from the previous month, although it was 84% ​​higher than a year ago when rates were closer to 8%. The seasonally adjusted purchasing index rose 5% from the previous week. The unadjusted purchasing index was 10% higher than in the same week last year.

“Mortgage applications remained essentially flat last week as interest rates rose for the fourth time in five weeks, reflecting volatility in the bond market ahead of the presidential election and the next FOMC meeting. The 30-year fixed rate was at 6.73%, its highest level since July 2024,” said Joel Kan, MBA deputy chief economist. “After a brief burst of activity in September, when rates were nearly 60 basis points lower, total applications fell 27%, driven by a decline in refinances. A large portion of the decline was due to government refinancings, which fell 12% compared to last week.”

Kan added: “Purchase applications increased compared to a week of shortened holidays and were 10 percent higher than a year ago. Although near-term purchase application activity has weakened, we continue to expect housing demand from younger homebuyers to support purchase growth over the next few years as inventory for sale begins to weaken.”

The refinance share of mortgage activity fell to 43.1% of all applications from 45.7% the previous week. The share of adjustable rate mortgages (ARMs) increased to 6.4% of all applications.

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