Mortgage borrowing ticked upward in the short Thanksgiving week, as subsiding rates helped bring home buyers to market, the Mortgage Bankers Association said.
The MBA's Market Composite Index, which measures weekly application activity based on surveys of the trade group's members, inched up a seasonally adjusted 0.3% for the period ending Nov. 24. Activity climbed upward for the fourth straight week but still finished 15.4% lower year over year. Data was adjusted to account for the Thanksgiving holiday.
The slight increase in applications was driven by greater purchase applications, but refinance applications fell over the week, according to Joel Kan, MBA vice president and deputy chief economist.
"Rates have declined more than 50 basis points over the past six weeks, which has helped to spur a small increase in purchase applications," he said in a press release.
The contract 30-year fixed-mortgage rate average for loans with conforming balances slid down to 7.37% from 7.41% in the previous survey. Points used to help bring down the rate increased to 0.64 from 0.62 for 80% loan-to-value ratio mortgages. The conforming rate hit
But the 30-year jumbo average among MBA lenders increased 3 basis points to 7.54% compared to 7.51% a week earlier. Borrower points also rose to 0.81 from 0.79.
As most rates headed lower, the seasonally adjusted Purchase Index picked up for the fourth consecutive week, climbing up 4.7%, but volumes landed 21.6% below levels of a year ago. Still, the increase in purchase mortgage activity corresponds to trends real estate agents reported seeing this year, according to a recent survey from Assurance IQ. Low existing inventory, though, has served to cap the rate of growth.
Heading in the other direction, the Refinance Index declined for the first time in four weeks, dipping 8.9% from seven days earlier. Despite the drop, refinance volumes saw a slight annual increase, edging up by 0.7% from a year ago when they plummeted to their lowest mark since 2000.
The weekly pullback in refinance applications led their share relative to total activity to shrink to 30.6%, down from 32.4% seven days earlier.
Government-sponsored loan applications, meanwhile, fell by only a fraction, with purchases up, but refinances down. The share of federally-backed applications also came in mostly flat, but borrower interest across sponsors varied. Mortgages guaranteed by the Federal Housing Administration garnered 13.5% of activity, falling from 14.8% a week earlier. But countering the slowdown in FHA loans was growth in the portion of applications coming through the Department of Veterans Affairs, which represented 12.6% of volume, rising from 11.3%. The slice of applications backed by the U.S. Department of Agriculture remained at 0.4% week over week.
The contract interest rate for the 30-year FHA-backed home loan decreased by a single basis point compared to the prior survey, falling to 7.18% from 7.19%. Borrowers typically used 0.81 in points, climbing from 0.79 a week earlier.
The 15-year fixed rate average also saw a 1 basis point decline, falling to 6.88% from 6.89%. Points slid to 0.52 compared to 0.76 for 80% LTV loans.
The average of the 5/1 adjustable-rate mortgage, which starts fixed before becoming variable after 60 months, took a 17 basis point decline to 6.59% from 6.76%. Points used by borrowers retreated to 0.76 from 0.82 a week earlier. Following a surge in ARM interest earlier this fall, the share of adjustable-rate mortgages has tempered in November, accounting for 8.1% of applications last week versus 8.3% in the prior survey.
