After last week’s [1] nearly 10% increase in mortgage applications, the Mortgage Bankers Association [2]reported applications fell 2.2% for the week ending on November 15.
The refinance index fell 8% but remains 152% higher than the prior-year and the purchase index increased 8% from last week—7% higher than the same week in 2018.
"U.S. and China trade anxieties and protests in Hong Kong pulled U.S. Treasuries lower last week, and the 30-year fixed mortgage rate followed the same path, dipping below 4%," said Joel Kan, MBA's Associate VP of Economic and Industry Forecasting. "Despite lower rates, mortgage applications decreased 2.2%, driven by an 8% slide in refinance activity.
“Rates have stayed in the same narrow range of around 4% since July, so we may be starting to see the expected slowdown in refinancing as the pool of eligible homeowners shrinks."
Kan added there may be signs that housing inventory is starting to “meaningfully rise,” which would help affordability and more choices for potential homebuyers.
The National Association of Realtors [3], however, reported that inventory for October was down nearly 2.7% from September and 4.3% from October 2018’s 1.85 million. Unsold inventory for October was at a 3.9-month supply, also a decline of 4.1 months last month and 4.3 months last year.
The refinance share of mortgage activity fell to 59.5% of total applications from last week’s 61.9%. The FHA share of total applications fell slightly to 13%, VA applications increased to 12.9%, and the USDA share of total applications was unchanged from 0.5%.
Also seeing declines were mortgage rates, with Freddie Mac’s Primary Mortgage Survey found the average rate for a 30-year fixed-rate mortgage fell to 3.66% from the prior weeks 3.75%.
“The housing market continues to steadily gain momentum with rising homebuyer demand and increased construction due to the strong job market, ebullient market sentiment, and low mortgage rates,” said Sam Khater, Freddie Mac’s Chief Economist. “Residential real estate accounts for one-sixth of the economy, and the improving real estate market will support economic growth heading into next year.”
The 15-year fixed-rate mortgage averaged 3.15%, which is a decline from the prior week’s 3.20%.