Mortgage demand jumped last week as average mortgage rates fell to their lowest levels since mid-September, the Mortgage Bankers Association (MBA) said Wednesday.
The trade group’s Market Composite Index, which tracks mortgage application volumes, rose 6.2% on a seasonally adjusted basis over the week ending Nov. 6. Purchase application volumes increased 8% from the previous week, while refinances advanced 4%.
Purchase applications remained 18% lower than year-ago levels, however, with typical 30-year mortgage rates averaging 7.21% last week — considerably higher than the 6.34% average 30-year rate recorded 12 months ago, according to MBA data.
“The declining trend in rates helped to spur stronger application activity, although the pace of purchase and refinance applications remain considerably lower than a year ago,” explained Joel Kan, deputy chief economist of the MBA, in commentary accompanying the weekly results.
Last week’s surge in applications was just the fourth weekly increase since late July, but the second increase in the past three weeks and the largest weekly gain since early June. Steady easing in rates has brought some relief to borrowers amid the broader decline in mortgage affordability.
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The share of applications for mortgages insured by the Federal Housing Administration declined over the week to 15.5% from 16% a week prior, as typical 30-year rates for those loans eased four basis points to 6.98%. Demand for mortgages backed by the Department of Veterans Affairs increased to 12.4% from 11.2%.
The refinance share of mortgage applications was flat at around 40%, while the adjustable-rate mortgage (ARM) share of activity remained elevated around 11%.
As average mortgage rates have stayed above 7% since mid-September for typical 30-year fixed-rate loans, ARMs have carried rates up to 100 basis points lower, offering a more affordable loan product for borrowers.
Weeks of elevated ARM application volumes contributed to a record-high share of ARM rate locks in October, according to figures published Tuesday by Optimal Blue.
