: Adjustable-rate mortgage applications rise to highest level since March 2008. House buyers take risk on rates falling (eventually).

by | Oct 19, 2022 | Stock Market

The numbers: Mortgage applications fell 4.5% this week, as higher mortgage rates dragged down the housing sector. Applications fell for the fourth month in a row, to the lowest level since 1997. From builder sentiment to home sales, rates — which are a hair’s breadth away from 7% — have hit home buyers and homeowners looking to refinance.

Rates weighed down the market composite index, a measure of mortgage application volume, the Mortgage Bankers Association (MBA) said on Wednesday.  The market index dropped 4.5% to 204.6 in the week ending October 14. A year ago, the index stood at 643. But applications for adjustable-rate mortgages rose to the highest level since March 2008. Adjustable-rate mortgages are typically fixed for five, seven, or 10 years — after which time the mortgage holder hopes they adjust to a lower rate. That is, they’re betting on rates eventually falling. Key details: The refinance index plunged by 6.8%, and was down 86% compared to a year ago.  The purchase index — which measures mortgage applications for the purchase of a home — fell by 3.7% from the previous week.  The adjustable-rate mortgage share of activity rose to 12.8% applications, which is a significant increase.  The average contract rate for the 30-year mortgage for homes sold for $647,200 or less was 6.94% for the week ending October 14.  That’s up from 6.81% the week before, the MBA said. For homes sold for over $647,200, t …

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