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Mortgage Applications Fell During Holiday Week

David Krechevsky
Nov 29, 2022
mortgage application

Third straight weekly decline in rates not enough to improve refi activity.

KEY TAKEAWAYS
  • The Market Composite Index decreased 0.8% on a seasonally adjusted basis from a week earlier.
  • The Refinance Index fell 13% from the previous week and was 86% lower than at the same point last year. 
  • The seasonally adjusted Purchase Index increased 4% from a week earlier.

Despite the third consecutive weekly decrease in rates, and likely due in part to the Thanksgiving holiday, applications fell last week, the Mortgage Bankers Association (MBA) said Wednesday.

According to the MBA’s Weekly Mortgage Applications Survey for the week ending Nov. 25, the Market Composite Index — a measure of mortgage loan application volume — decreased 0.8% on a seasonally adjusted basis from a week earlier. Unadjusted, the index dropped 33% from the previous week. The week’s results include an adjustment for the observance of the Thanksgiving holiday.

The Refinance Index fell 13% from the previous week and was 86% lower than at the same point last year. 

The seasonally adjusted Purchase Index, however, increased 4% from a week earlier. The unadjusted Purchase Index decreased 31% from the previous week and was 41% lower than the same week last year.

“Mortgage rates declined again last week, following bond yields lower,” said Joel Kan, MBA vice president and deputy chief economist. “The 30-year fixed mortgage rate decreased to 6.49% and has now fallen 57 basis points over the past four weeks. Additionally, mortgage rates for most other loan types declined.”

Kan said the economy, both in the United States and abroad, is weakening, “which should lead to slower inflation and allow the (Federal Reserve) to slow the pace of rate hikes. Purchase activity increased slightly after adjusting for the Thanksgiving holiday, but the decline in rates was still not enough to bring back refinance activity. Refinance applications fell another 13%, and the refinance share of applications was at 26%. Both measures were at their lowest levels since 2000.”

The refinance share of mortgage activity decreased to 26.1% of total applications from 28.4% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 9% of total applications.

The FHA share of total applications decreased to 12.2%, from 13.4% the previous week. The VA share of total applications increased to 11.2% from 10.5% a week earlier. The USDA share of total applications dipped to 0.5% from 0.6% the previous week.

Other key highlights: 

  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 6.49% from 6.67%, with points remaining at 0.68 (including the origination fee) for 80% loan-to-value ratio (LTV) 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 $647,200) increased to 6.35% from 6.3%, with points decreasing to 0.61 from 0.74 (including the origination fee) for 80% LTV loans. The effective rate increased from last week. 
  • The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 6.57% from 6.66%, with points increasing to 1.14 from 1.01 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
  • The average contract interest rate for 15-year fixed-rate mortgages decreased to 6.02% from 6.08%, with points decreasing to 0.69 from 0.70 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
  • The average contract interest rate for 5/1 ARMs decreased to 5.48% from 5.78%, with points increasing to 0.89 from 0.73 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

The MBA’s survey covers over 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks, and thrifts. The base period and value for all indexes is March 16, 1990=100.

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