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Refis Fade Out As Purchase Activity Increases

Katie Jensen
Dec 01, 2021

Mortgage applications fell 7.2% from last week, according to the MBA Weekly Mortgage Applications Survey.

KEY TAKEAWAYS
  • Mortgage applications fell 7.2% from last week, according to Weekly Mortgage Applications Survey for the week ending November 26, 2021. 
  • The refinance index decreased 15% from the previous week and was 41% lower than the same week a year ago.
  • Meanwhile, the purchase index increased 5% from one week earlier, but fell 30% on an unadjusted basis which is 8% lower than a year ago. 
  • The average contract interest rate for a 30-year fixed-rate mortgage with conforming loan balances increased to 3.31% from 3.24% the week prior.

Mortgage applications fell 7.2% from last week, according to Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending November 26, 2021. 

On an unadjusted basis, the market composite index, a measure of mortgage loan application volume, decreased 37% compared to the previous week. The refinance index decreased 15% from the previous week and was 41% lower than the same week a year ago. Meanwhile, the purchase index increased 5% from one week earlier, but fell 30% on an unadjusted basis which is 8% lower than a year ago. 

"Mortgage rates rose for the third week in a row, reducing the refinance incentive for many borrowers. The 30-year fixed rate hit 3.31 percent - the highest since this April - and led to refinance applications falling more than 14 percent. Over the past three weeks, rates are up 15 basis points and refinance activity has declined over 18 percent," said Joel Kan, MBA's associate vice president of economic and industry forecasting. "Despite higher mortgage rates, purchase applications had a strong week, mostly driven by a 6 percent increase in conventional loan applications.”

The refinance share of mortgage activity declined to 59.4% of total applications from 63.1% the previous week. The adjustable-rate mortgage (ARM) share of mortgage activity increased to 3.6% of total applications.

The FHA share of total applications increased to 8.9% from 8.6% the week prior, while the VA share of total applications decreased to 10% from 10.3% the week prior. 

The average contract interest rate for a 30-year fixed-rate mortgage with conforming loan balances ($548,250 or less) increased to 3.31% from 3.24% the week prior, with points increasing to 0.43 from 0.36 for 80% LTV loans.  

“Conventional loans tend to be larger than government loans, and this was evident in the average loan amount, which increased to $414,700 - the highest since February 2021,” Kan continued. “As home-price appreciation continues at a double-digit pace, buyers of newer, pricier homes continue to dominate purchase activity, while the share of first-time buyer activity remains depressed.”

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $548,250) decreased to 3.27% from 3.28% the week prior, with points increasing to 0.35 from 0.26 for 80% LTV loans. 

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.42% from 3.27% the week prior, with points increasing to 0.35 from 0.34 for 80% LTV loans.
 

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