The number of mortgage applications filed by potential homebuyers and refinancing borrowers fell 12% for the week ending October 19, an industry trade group said.
The steep drop is attributed to an upward adjustment made a week earlier to account for the Columbus Day holiday, according to the Mortgage Bankers Association. When reviewing the numbers on an unadjusted basis, applications fell 2%.
The MBA noted that refinancing activity declined 13% from the previous week while home purchase applications fell 8%. The trend of slowdowns is expected to continue.
The MBA is warning it expects to see $1.3 trillion in mortgage originations during 2013. This is down more than 25% from its revised estimation of $1.7 trillion in 2012.
As applications declined, rates went up with the average 30-year, fixed-rate mortgage on a conforming loan increasing to 3.63% from 3.57%.
The 30-year jumbo FRM also grew to 3.85% from 3.81% last week.
The 30-year, FRM backed by FHA edged up to 3.41% from 3.34%, while the average 15-year, FRM hit 2.96% from 2.87% last week.
The 5/1 ARM also grew to 2.72% from 2.59%.