Mortgage applications rise 3.4% as 30-year rate dips to 7.37%

U.S. mortgage applications rose 3.4% in the week ending Oct. 23 as the average 30-year fixed rate fell to 7.37% from 7.41%, its lowest in three weeks, the Mortgage Bankers Association said Wednesday. Purchase applications rose 4% on a seasonally adjusted basis but were 18% below the same week a year earlier, and refinance applications rose 3% but were 61% lower than a year ago. Adjustable-rate mortgages made up 11.3% of applications, the highest share in more than a year, as the average 5/1 ARM rate eased to 6.41% from 6.46%. The 15-year fixed rate slipped to 6.70% from 6.73%. MBA deputy chief economist Joel Kan said rates were still more than a percentage point higher than a year ago and that many homebuyers had put purchase plans on hold.

Why it matters: Most homeowners hold mortgages with rates well below today's, which leaves them little reason to refinance or sell. The rising ARM share shows more borrowers choosing a lower starting rate to cut monthly payments, with the trade-off that an ARM's rate resets to market levels after its introductory period.