Mortgage App Volume Rises to Six-Week High

As Freddie Mac reported yet another dip in mortgage rates to levels last reported in late September, mortgage applications rose for the third consecutive week, rising 3% over last week’s totals according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 17, 2023.

“Mortgage applications increased to their highest level in six weeks, but remain at very low levels,” said Joel Kan, MBA’s VP and Deputy Chief Economist. “Purchase applications were up almost 4% over the week, on a seasonally adjusted basis, as both conventional and government purchase loans saw increases. The average loan size on a purchase application was $403,600, the lowest since January 2023. This is consistent with other sources of home sales data showing a gradually increasing first-time homebuyer share.”

The MBA’s Refinance Index increased 2% from the previous week, and was 4% lower than the same week one year ago. The seasonally adjusted Purchase Index increased 4% from one week earlier. The unadjusted Purchase Index decreased 1% compared to the previous week, yet was 20% lower than the same week one year ago.

Freddie Mac’s latest Primary Mortgage Market Survey (PMMS) shows the 30-year fixed-rate mortgage (FRM) averaged 7.29% as of November 22, 2023, down 15 basis points from last week when it averaged 7.4%. A year ago at this time, the 30-year FRM averaged 6.58%. Freddie Mac also reported the 15-year FRM averaging 6.67%, down from last week when it averaged 6.76%. A year ago at this time, the 15-year FRM averaged 5.9%.

“Mortgage rates continued to decrease heading into the Thanksgiving holiday,” said Sam Khater, Freddie Mac’s Chief Economist. “In recent weeks, rates have dropped by half a percent, but potential homebuyers continue to hold out for lower rates and more inventory. This dynamic is reflected in the latest data showing that existing home sales have fallen to a 13-year low.”

As Khater noted, according to the latest existing-home sales report for October 2023 published by the National Association of Realtors (NAR), existing-home sales dropped 4.1% month-over-month and 14.6% year-over-year. Existing sales, which includes completed transactions of single-family homes, townhomes, condominiums, and co-ops, again fell from September to a seasonally adjusted annual rate of 3.79 million units in October. On a yearly basis, that number is down from 4.44 million from numbers reported by the NAR in October 2022.

“In a few short weeks, mortgage rates have largely erased the sharp climb traversed in October,” added Danielle Hale, Chief Economist for Realtor.com. “Nevertheless, the cost of borrowing remains high. Except for the most recent eight weeks, today’s rate is the highest since 2000. As a result, even after the move lower, today’s rates are unlikely to draw more than the most motivated buyers back into the market. If rates can hold onto this improvement, or notch a further decline, however, this could mean that ‘buying a home’ does seem like a viable new year’s resolution to a greater number of households.”

The lowering of mortgage rates is slowly pushing more back into the refi market, as the MBA reported the refinance share of mortgage activity increased to 32.4% of total applications, up from 31.9% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 8.3% of total applications.

“Refinance applications increased 1.6 percent last week, but the level of refinances continues to be well below historical averages, given that most borrowers already have a rate well below current market rates,” added Kan.

By loan type, the MBA reported that the FHA share of total applications increased to 14.8% from 14.4% the week prior, while the VA share of total applications increased to 11.3% from 11.2% the week prior. The USDA share of total applications decreased to 0.4% from 0.5% the week prior.