Mortgage Apps See Minor November Gain

A setback in refinancing volumes weighed down on overall mortgage application volumes for November, even as interest rates continued to tick down.

Based on weekly application data released by the Mortgage Bankers Association (MBA), macroeconomics firm Capital Economics calculated a 0.3 percent increase in mortgage applications last month. The meager uptick compares to a 10.1 percent surge in October.

According to MBA, applications were down week-to-week throughout most of November, with the exception of a 4.9 percent seasonally adjusted increase for the week ending November 14. That was offset by a 4.3 percent decline the following week and a holiday-adjusted 7.3 percent drop during the Thanksgiving week.

The slowdown in application activity came despite a decline in the average 30-year mortgage interest rate—which hit an 18-month low of 4.17 percent—and improved labor indicators.

"The low level of mortgage interest rates, signs of an easing in credit conditions and steady gains in employment have yet to be reflected in the data for mortgage applications," said Ed Stansfield, chief property economic at Capital Economics.

According to the firm, November's results included a 0.2 percent decline in refinance applications, which had jumped 18.5 percent only a month prior.

That was offset by a modest 1.7 percent increase in applications for home purchases.

Even with the increase, purchase applications still came up 10 percent short of where they were a year ago, implying "that the market remains unduly dependent on investors and cash buyers" as mortgage-dependent shoppers remain on the sidelines, Stansfield said.

Despite November's stumble in applications, Stansfield maintains that the market is headed in the right direction as credit standards slowly ease, mortgage rates remain historically low, and the economy continues to make strides.

"[W]ith the economy likely to deliver steady gains in jobs and a recovery in incomes next year, we are still optimistic that mortgage demand will pick up," he said. "However, it will take several more months before we can be sure that the market has finally turned the corner."