Mortgage application activity rose 2.1% in the week ending Nov. 19, according to the Mortgage Bankers Association (MBA).

The gain, however, solely resulted from a 14.4% jump in the Purchase Index to ~205.1 — its highest level since May.

"The increase in purchase applications last week aligns with other incoming data suggesting that consumers are feeling somewhat more confident with their financial situation," said Michael Fratantoni, MBA's vice president of research and economics. "While the increase was magnified somewhat by the comparison to the holiday week, the level of purchase applications on a seasonally adjusted basis is now at its highest level since the expiration of the homebuyer tax credit."

The Refinance Index, meanwhile, slipped 1% to ~3792.4. This is the lowest the index has been since late June. As a percent of total application activity, refinancing share declined to 78.6% from 80.3%. The decline in refinancing activity was because of the increase in the average contract interest rate for 30-year fixed rate mortgages to 4.50% from 4.46%.

So far in November, refinancing activity is averaging 12% lower compared with October as a result of higher mortgage rates. This keeps the pressure off prepayments in December, which are reported in January.

Currently, December speeds are expected to rise about 5% from November's estimate with relatively uniform increases across the stack on average. One additional collection day is a factor in the slightly higher speeds.


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