Last Updated on December 2, 2023 by Robert C. Hoopes
US Mortgage Applications Increase, Refinance Activity Remains Muted
According to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey, mortgage applications in the US increased by 0.3% in the week ending November 24, 2023. The Market Composite Index, which measures mortgage loan application volume, also increased by 0.3% on a seasonally adjusted basis compared to the previous week.
However, on an unadjusted basis, the Market Composite Index decreased by 33% compared to the previous week. The Refinance Index also saw a decrease of 9% from the previous week, but was 1% higher compared to the same week one year ago.
One positive sign was the increase in purchase applications, which rose by 5% from the previous week. However, overall activity was still around 20% lower than a year ago. This can be attributed to the low supply of existing homes on the market.
One contributing factor to the increase in mortgage applications is the decrease in mortgage rates. The 30-year fixed-rate reached its lowest level in 10 weeks at 7.37%. This decrease in rates may have prompted more individuals to consider purchasing a home or refinancing their existing mortgage.
Despite the decrease in mortgage rates, refinance activity is expected to remain muted. This is because many borrowers have already locked in lower rates in previous years. As a result, the refinance share of mortgage activity decreased to 30.6% from 32.4% the previous week.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances also decreased to 7.37%. However, the average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances increased slightly to 7.54%. The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased slightly to 7.18%. Additionally, the average contract interest rate for 15-year fixed-rate mortgages decreased to 6.88%, while the rate for 5/1 adjustable-rate mortgages decreased to 6.59%.
It is important to note that the survey covers over 75% of all US retail residential mortgage applications and has been conducted weekly since 1990. This data provides valuable insights into the state of the mortgage market in the US.
Overall, the increase in mortgage applications and the decrease in rates indicate a slightly positive outlook for the housing market. However, the low supply of existing homes and the muted refinance activity serve as reminders of the challenges that still exist in the industry.