REAL ESTATE

Mortgage volumes increase on gains in conventional loans

Mortgage activity increased last week, with purchases showing particular resilience amid rising rates.

The Mortgage Bankers Association’s Market Composite Index, a measure of application volume based on a survey of members, increased a seasonally adjusted 1.8% for the weekly period ending Nov. 19, while the unadjusted index inched up 0.1% week over week. The seasonally adjusted volume compared to the same period one year ago was 25% lower.

Both purchases and refinances contributed to the weekly uptick. The Purchase Index rose 5% on a seasonally adjusted basis from a week earlier, reflecting increases among both conventional and government applications, while unadjusted volumes decreased by 0.4%. On a year-over-year basis, unadjusted purchases came in 4% lower.

“Purchase activity increased for the third straight week, as housing demand remains robust, even as the housing market approaches the typically slower holiday season,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. Researchers at both the National Association of Realtors and Fannie Mae released data in the past week indicating that purchase demand was stronger than anticipated this fall.

The Refinance Index edged up 0.4% from the previous week, thanks to increases among conventional loans. But volumes were 34% lower on a year-over-year basis, when the 30-year fixed mortgage rate was 32 basis points lower than current levels.

“Borrowers continue to lock in mortgages in anticipation of higher rates in the future,” Kan noted.

Refinances also increased their percentage of activity relative to overall volume, taking a 63.1% share, up from 62.9% the prior week. Adjustable-rate applications made a similar gain in share, climbing to 3.4% from 3.1% seven days earlier.

Unlike earlier in the month, a rise in interest rates did not drive the index down, as investors take a wait-and-see approach regarding what announcements the central bank might make in the near future, according to Kan.

“The financial markets continue to discern the Federal Reserve’s policy path in the coming months in light of the current high-growth, high-inflation environment,” he said.

In addition to the gain in volume, average loan sizes also grew across all categories week over week, with the mean amount among the total pool of applications inching up 0.3% to $345,000 from $344,100. Lenders also reported similar small increases in refinance and purchase size, with the average amount for refinances coming out to $308,600, an 0.5% uptick from $307,200 recorded in the prior seven-day period. The average purchase amount rose 0.2% to $407,200 from $406,500 one week earlier, marking the ninth week in a row the mean purchase size stayed above $400,000.

The share of federally backed applications declined across the board compared to the previous week, even as the number of new government-purchase mortgages grew. Federal Housing Administration-sponsored loans took an 8.6% share, down from 8.9%, while applications taken through Veterans Affairs programs dropped to 10.3% of the total volume from 10.8%. U.S. Department of Agriculture-backed mortgages accounted for 0.4% of all loans, compared with 0.5% a week earlier.

Interest rates ended up higher after an up-and-down week, Kan said, with averages rising in all major categories compared to the prior weekly period.

  • The average contract interest rate for the 30-year fixed-rate mortgage with conforming balances of $548,250 or less climbed to 3.24% from 3.2% a week earlier.
  • The 30-year jumbo fixed rate mortgage for balances greater than $548,250 rose two basis points to 3.28% from 3.26% week over week.
  • The average 30-year fixed-rate average for Federal Housing Administration-backed loans increased to 3.27%, a four-basis-point increase from 3.23% the previous week.
  • The 15-year fixed-rate mortgage average climbed for the second straight week, rising to 2.59% from 2.56%.
  • The 5/1 adjustable rate average jumped 11 basis points to 3%, up from 2.89% reported in the previous seven-day period.


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