Per the Mortgage Bankers Association’s (MBA) survey through the week ending September 8th, total mortgage activity decreased 0.8% from the previous week and the average 30-year fixed-rate mortgage (FRM) rate rose six basis points to 7.27%. The FRM rate has remained above 7% since the start of August.
The Market Composite Index, a measure of mortgage loan application volume, fell by 0.8% on a seasonally adjusted (SA) basis from one week earlier. Purchasing activity increased 1.3%, while refinancing activity decreased 5.4% week-over-week.
Interest rates remained above seven percent for the sixth consecutive week. The combination of higher rates and low existing for-sale inventory have hampered potential buyers as the purchase index remained historically low. The seasonally adjusted purchase index was 27.5% lower than one year ago while the seasonally adjusted refinancing index was 31.1% lower than one year ago.
The refinance share of mortgage activity fell from 30.0% to 29.1% over the week, while the adjustable-rate mortgage (ARM) share of activity rose to 7.5% from 6.7%. The average loan size for purchases was $410,900 at the start of September, down from $413,600 over the month of August. The average loan size for refinancing decreased from $255,900 over the month of August to $255,400. The average loan size for an ARM was up at start of September to $833,000 while the average loan size for a FRM fell to $329,200.
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The persistently high mortgage rates discussed in this article could influence construction loans. Builders should consider these elevated rates when budgeting and securing construction financing, as they may impact borrowing costs and project feasibility. Careful financial planning is essential to navigate this rate environment effectively.