Refinance applications posted a 5% increase – bouncing back from a 13% plunge the week before – while purchase applications slid 3% week over week. Due to rising rates and the slower pace of mortgage application activity, mortgage originations in the third quarter plummeted 62%, with refis driving most of the decline, according to the Milliman Mortgage Default Index (MMDI).

“With interest rates rising, fewer homeowners are refinancing for a more favorable rate or length-of-loan compared to the year prior,” MMDI author Jonathan Glowacki explained.

“Purchase activity slowed last week, with a drop in conventional purchase applications partially offset by an increase in FHA and USDA loan applications,” Kan added. “The average loan size for purchase applications decreased to $387,300 – its lowest level since January 2021. The decrease was consistent with slightly stronger government applications and a rapidly cooling home-price environment.”