While the Mortgage Bankers Association reported that applications rose 1.5% from the prior week ending on November 22, mortgage rates also saw a slight increase.
Freddie Mac’s Primary Mortgage Market Survey found that the average rate for a 30-year-fixed-rate mortgage was 3.68%—up slightly from the prior week’s 3.66%.
“Following a decline in the first nine months of 2019, mortgage rates have traded narrower during the last two months with a modest drift upward due to an improved economic outlook,” said Sam Khater, Freddie Mac’s Chief Economist. “While there has been a lag in the housing market’s response to lower rates, real estate volumes have clearly shifted into a higher gear. Moreover, the recent improvement in the cyclical segments of the economy and easing financial conditions will provide a gentle tailwind to the real estate market rebound over the next few months.”
The 30-year-fixed-rate mortgage averaged 4.81% this time last year.
The MBA says that refinances, once again, led the surge for applications as the refinance index increased 4% from the prior week and was 314% higher than the same week in 2018. The purchase index fell 1% from a week earlier.
"Mortgage rates stayed below 4% for the second straight week and borrowers responded positively, with mortgage applications rising 1.5% on the back of increases in both refinance and purchase activity," said Joel Kan, MBA's AVP of Economic and Industry Forecasting. "Refinances have been strong this month, but we are starting to see the average pace slow compared to the peak experienced in August through October."
Kan added that the strong refinance and purchase activity was more prominent due to Thanksgiving being a week later than in 2018. He said the mortgage market is on track for its best year for originations since 2007.
The refinance share of mortgage activity increased to 62% of total applications, which is an increase from the prior week’s 59.5%.
Ellie Mae found that the share of refinances accounted for 51% of all closed loans in October—the highest percentage since March 2015.
Purchases accounted for 49% of total closed loans, which is a 2% decline from the prior month. This occurred during the same time mortgage rates rose, as the 30-year mortgage rate increased to 3.94% for all closed loans—up from 3.93% in September.