Mortgage Applications Dip Slightly in MBA Weekly Survey

Despite sustained record-low interest rates, mortgage applications dipped slightly during the holiday-shortened Thanksgiving week, the Mortgage Bankers Association reported this morning in its  Weekly Mortgage Applications Survey for the week ending November 27. 

The week’s results include an adjustment for the Thanksgiving holiday.

The Market Composite Index decreased by 0.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 32 percent compared to the previous week. 

The unadjusted Refinance Index decreased by 5 percent from the previous week but was 102 percent higher than the same week one year ago. The refinance share of mortgage activity decreased to 69.5 percent of total applications from 71.1 percent the previous week.

The seasonally adjusted Purchase Index increased by 9 percent from one week earlier. The unadjusted Purchase Index decreased by 28 percent compared to the previous week but was 28 percent higher than the same week one year ago.

The FHA share of total applications decreased to 9.1 percent from 10.0 percent the week prior. The VA share of total applications increased to 11.9 percent from 11.8 percent the week prior. The USDA share of total applications remained unchanged from 0.4 percent the week prior.

“After adjusting for the Thanksgiving holiday, mortgage applications were mixed, with a jump in purchase applications and a decline in refinances,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Purchase activity continued to show impressive year-over-year gains, with both the conventional and government segments of the market posting another week of growth.

Kan noted purchase loan amounts continue to be significantly higher than their average over the past decade and hit $375,000 last week, the largest since the inception of the MBA survey in 1990. “Housing demand remains strong, and despite extremely tight inventory and rising prices, home sales are running at their strongest pace in over a decade,” he said. “The sustained period of low mortgage rates continues to spark borrower demand, and the mortgage industry is poised for its strongest year in originations since 2003. The ongoing refinance wave has been beneficial to homeowners looking to lower their monthly payments during these challenging economic times brought forth by the pandemic.”

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) remained unchanged at 2.92 percent, with points decreasing to 0.31 from 0.35 (including origination fee) for 80 percent loan-to-value ratio loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) increased to 3.19 percent from 3.18 percent, with points increasing to 0.30 from 0.27 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by FHA increased to 3.00 percent from 2.99 percent, with points increasing to 0.34 from 0.27 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 2.53 percent from 2.51 percent, with points decreasing to 0.27 from 0.34 (including origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.

The average contract interest rate for 5/1 adjustable-rate mortgages remained unchanged at 2.63 percent, with points increasing to 0.47 from 0.44 (including origination fee) for 80 percent LTV loans.  The effective rate increased from last week.

The ARM share of activity decreased to 1.8 percent of total applications.

The survey covers more than 75 percent of all U.S. retail and consumer direct residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts.