Mortgage application volume flat on steep drop in government refis
Mortgage applications slipped 0.3% from one week earlier, as refinance volume, particularly for Federal Housing Administration and Veterans Affairs loans, shrank significantly, according to the Mortgage Bankers Association.
The MBA's Weekly Mortgage Applications Survey for the week ending Nov. 13 found that the refinance index decreased 2% from the previous week and was 98% higher than the same week one year ago. The refinance share of mortgage activity decreased to 69.8% of total applications from 70% the previous week. This week's results do not include an adjustment for the Veterans Day holiday.
"Mortgage market activity was mixed last week, despite the 30-year fixed rate mortgage staying below 3%," Joel Kan, the MBA's associate vice president of economic and industry forecasting, said in a press release. "The average refinance loan balance of $291,000 last week was the lowest since January. Many borrowers with higher loan balances may have acted earlier on in the current refinance wave."
The seasonally adjusted purchase index increased 4% from one week earlier, while the unadjusted purchase index decreased 1% compared with the previous week and was 26% higher than the same week one year ago.
"The purchase market recovered from its recent weekly slump, with activity … climbing above year-ago levels for the 26th straight week. Housing demand remains supported by the ongoing recovery in the job market, and an increased appetite from households seeking more space because of the pandemic," Kan said.
Adjustable-rate mortgage activity decreased to 1.9% from 2% of total applications, while the share of FHA-insured loan applications decreased to 10.5% from 10.6% the week prior.
The VA-guaranteed loan market share decreased to 12.1% from 12.6% and the U.S. Department of Agriculture/Rural Development share increased to 0.5% from 0.4% the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) increased 1 basis point to 2.99%. For 30-year FRMs with jumbo loan balances (greater than $510,400), the average contract rate decreased 2 basis points to 3.11%.
As for the 30-year FHA fixed rate loan, the average contract rate increased 3 basis points to 3.11%. For 15-year FRMs, the average increased 4 basis points to 2.59%. The average contract interest rate for 5/1 ARMs increased 5 basis points to 2.84%.