Mortgage activity picked up last week, with purchases showing particular resilience amid rising interest rates.
The Mortgage Bankers Association's Market Composite Index, a measure of application volume based on a member survey, increased 1.8% seasonally for the weekly period ending November 19, while the unadjusted index increased 0.1% week-to-week. rise. The seasonally adjusted volume was 25% lower than in the same period of the previous year.
Both buying and refinancing contributed to the weekly uptrend. The purchasing index rose by a seasonally adjusted 5% compared to the previous week, which can be attributed to increases in both conventional and government applications, while the unadjusted volumes decreased by 0.4%. Year-on-year, unadjusted purchases were 4% lower.
“Buying activity rose for the third straight week as housing demand remains robust as the housing market approaches the typically slower Christmas season,” said Joel Kan, associate vice president of Economic and Industry Forecasting, MBA. Researchers from the National Association of Realtors and Fannie Mae released data last week suggesting that purchase demand was stronger than expected this fall.
The refinancing index rose by 0.4% compared to the previous week, thanks to increases in conventional loans. However, the volume was 34% lower year-over-year when the 30-year fixed-rate mortgage rate was 32 basis points below current levels.
"Borrowers continue to lock out mortgages in anticipation of higher interest rates in the future," noted Kan.
Refinancing also increased its share of activity in relation to the total volume and reached a share of 63.1% compared to 62.9% in the previous week. Variable rate requests made a similar equity gain, climbing 3.4% from 3.1% seven days earlier.
Unlike earlier in the month, a rise in rates has not pushed the index down as investors wait to see what announcements the central bank might make in the near future, Kan said.
"Financial markets will continue to recognize the Federal Reserve's policy direction in the coming months, given the current high growth, high inflation environment," he said.
In addition to the growth in volume, the average loan size across all categories increased from week to week, with the average total pool of applications increasing 0.3% from $ 344,100 to $ 345,000. Lenders also reported similar small increases in refinancing and purchase volume, with the average refinancing amount being $ 308,600, up 0.5% from $ 307,200 in the previous seven day period. The average purchase amount increased 0.2% from $ 406,500 a week earlier to $ 407,200, marking the ninth straight week that the average purchase size was over $ 400,000.
The proportion of government-supported applications declined across the board compared to the previous week, although the number of new mortgage loans by the state increased. Federal Housing Administration-sponsored loans accounted for 8.6% versus 8.9%, while claims made through Veterans Affairs programs decreased from 10.8% to 10.3% of the total. Department of Agriculture-secured mortgages accounted for 0.4% of all loans, compared with 0.5% a week earlier.
Interest rates rose higher after a week of up and down, Kan said, with averages in all major categories increasing compared to the previous week period.
The average contract rate on the 30-year fixed-rate mortgage with balances of $ 548,250 or less rose from 3.2% a week earlier to 3.24% 3.28% from 3.26% week over week. The 30-year fixed rate average on loans secured by the Federal Housing Administration rose to 3.27%, up four basis points from 3.23% the previous week. The average mortgage rate rose to 2.59% from 2.56% for the second straight week. The 5/1 average of the floating rate increased 11 basis points to 3%, from 2.89% in the previous seven-day period.