US mortgage applications extend decrease

US mortgage applications declined 4.7% in the week ending October 3, extending the 12.7% plunge from the previous week, as higher borrowing costs continued to dampen housing demand.

Refinancing activity, which is particularly sensitive to short-term rate fluctuations, dropped 8%, while purchase applications slipped 1%.

The average contract rate for 30-year fixed-rate mortgages with conforming loan balances (up to $806,500) edged slightly lower to 6.43% from 6.46% a week earlier but remained above the one-year low of 6.34% reached in mid-September.

Amid uncertainty about the Federal Reserve’s next policy moves, more borrowers turned to adjustable-rate mortgages (ARMs), which accounted for 9.5% of total applications, up from 8.4% the week before.