Mortgage applications increased for the first time in nearly two months last week.
Perhaps due in part to the U.S. presidential election or the 25-basis-point cut to the Federal Reserve's benchmark borrowing rate, home loan applications rose by 0.5% the week ending November 8, per the Mortgage Bankers Association (MBA) Weekly Applications Survey.
The MBA’s Refinance Index decreased 2% from the previous week, but rose 43% from the same week one year ago. The seasonally adjusted Purchase Index increased 2% from one week earlier, and 1% from the same week one year ago on an unadjusted basis.
“Mortgage rates continued to increase last week, driven by higher Treasury yields as financial markets digested the likely impacts of a Trump presidency. The Federal Reserve’s 25-basis-point rate cut was already anticipated and did little to move the markets,” MBA Vice President and Deputy Chief Economist Joel Kan commented on the data.
Not responsible for the uptick in home loan applications were mortgage rates, which reached their highest level since July during the same time frame.
“Despite the increase in rates, applications increased for the first time in seven weeks,” Kan pointed out, adding that rates for FHA mortgages bucked the overall trend and were lower over the week, which likely helped some borrowers.
The most recent data stand in contrast to the week prior, when purchase activity fell to its lowest level since mid-August, and refinances, to their lowest level since May. The week ending November 8, the refinance share of mortgage activity remained unchanged at 39.9% of total applications.
Meanwhile, the adjustable-rate mortgage (ARM) share of activity decreased to 6.5% of total applications; the FHA share increased to 16% from 15.5% the week prior; the VA share increased to 13.3% from 12.5%; and, the USDA share remained unchanged at 0.5%.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) increased to 6.86% from 6.81%, with points decreasing to 0.60 from 0.68 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate increased from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $766,550) increased to 7% from 6.98%, with points decreasing to 0.48 from 0.65 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
