Higher mortgage rates and the Thanksgiving holiday contributed to further slowing in refinancing activity for the week ending Nov. 26.
According to the Mortgage Bankers Association, the Refinance Index plunged a seasonally adjusted 21.6% to ~2973. This was the third straight weekly decline and places the index at its lowest level since early June. As a percent of total applications, refinancing share fell to 74.9% from 78.6% — also at its lowest level since June.
The average contract interest rate for 30-year fixed rate mortgages bumped up six basis points to 4.56% with points increasing as well for 80% LTV loans.
For the month of November, the Refinance Index was down 18% on average from October's average as 30-year mortgage rates increased to a 4.30% average from 4.23%.
At this time, December prepayments (reported in January) are expected to increase around 5% with one additional collection day factoring in, while a decline in refinancing activity in response to higher mortgage rates will partially offsett this.
Speeds are projected to decline around 10% in January.
Meanwhile, the Purchase Index rose 1.1% to ~207 as home buyers take advantage of record affordability levels. The index remains at its highest level since early May, following the expiration of the homebuyers' tax credit.
