Mortgage applications in US decline as rates increase

Biggest constraint for many prospective homebuyers over past year had been lack of inventory, says economist

By Ovunc Kutlu

ISTANBUL (AA) - US mortgage applications declined last week, as mortgage rates showed gains, according to a Mortgage Bankers Association (MBA) report released Wednesday.

The market composite index, a measure of mortgage loan application volume, fell 5.1% on a seasonally adjusted basis for the week ending Oct. 4. On an unadjusted basis, the index decreased 5% compared to the previous week.

"In the wake of stronger economic data last week, including the September jobs report, mortgage rates moved higher," said Mike Fratantoni, MBA’s chief economist.

"The largest constraint for many prospective homebuyers over the past year had been the lack of inventory," he added. "Now, there are more homes available in many markets across the country, and with mortgage rates still low compared to recent history, at least some potential homebuyers are moving ahead."

The average contract interest rate for 30-year fixed-rate mortgages increased to 6.36% last week, reaching the highest level since August.

The rate for 15-year fixed-rate mortgages, meanwhile, rose to 5.71% from 5.51% during that period.

The MBA survey covers more than 75% of US retail residential mortgage applications.

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