Mortgage Applications Increase on Record-Low Interest Rates in MBA Weekly Survey

With mortgage rates falling record lows for the 14th time this year, borrowers took the bait, the Mortgage Bankers Association reported this morning in its Weekly Mortgage Applications Survey for the week ending November 20.

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances dropped to a survey-low 2.92 percent, from 2.99 percent the previous week.

The Market Composite Index increased by 3.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased by 3 percent compared to the previous week. 

The unadjusted Refinance Index increased by 5 percent from the previous week and was 79 percent higher than the same week one year ago. The refinance share of mortgage activity increased to 71.1 percent of total applications from 69.8 percent the previous week.

The seasonally adjusted Purchase Index increased by 4 percent from one week earlier. The unadjusted Purchase Index decreased by 2 percent compared to the previous week and was 19 percent higher than the same week one year ago.

The FHA share of total applications decreased to 10.0 percent from 10.5 percent the week prior. The VA share of total applications decreased to 11.8 percent from 12.1 percent the week prior. The USDA share of total applications decreased to 0.4 percent from 0.5 percent the week prior.

“Thirty-year fixed mortgage rates dropped seven basis points to 2.92 percent, another record low in MBA’s survey,” said Joel Kan, MBA Associate Vice President of Industry and Economic Forecasting. “Weekly mortgage rate volatility has emerged again, as markets respond to fiscal policy uncertainty and a resurgence in COVID-19 cases around the country. The decline in rates ignited borrower interest, with applications for both home purchases and refinancing increasing on a weekly and annual basis.”

Kan noted the “ongoing refinance wave” has continued into November, with both the refinance index and the share of refinance applications at their highest levels since April, as another week of lower rates drew more conventional loan borrowers into the market.  

“Amidst strong competition for a limited supply of homes for sale, as well as rapidly increasing home prices, purchase applications increased for both conventional and government borrowers,” Kan added. “Furthermore, purchase activity has surpassed year-ago levels for over six months.”

As noted above, MBA said the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to a survey-low 2.92 percent from 2.99 percent, with points decreasing to 0.35 from 0.37 (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 3.18 percent from 3.11 percent, with points decreasing to 0.27 from 0.28 (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 decreased to a survey-low 2.99 percent from 3.11 percent, with points decreasing to 0.27 from 0.37 (including origination fee) for 80 percent LTV loans.  The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to a survey-low 2.51 percent from 2.59 percent, with points decreasing to 0.34 from 0.35 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 adjustable-rate mortgages decreased to 2.63 percent from 2.84 percent, with points decreasing to 0.44 from 0.53 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The ARM share of activity remained unchanged at 1.9 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.