Mortgage applications rose 6.3% on a seasonally adjusted basis during the week ending Nov. 22, driven by a 12% increase in demand for purchase loans, according to data released Wednesday by the Mortgage Bankers Association (MBA).
It is the third straight weekly increase for applications — a good sign for mortgage lenders heading into the typically slow Thanksgiving holiday. Demand is growing as mortgage rate increases are leveling off following several weeks of upward movement. HousingWire‘s Mortgage Rates Center showed the average 30-year conforming rate at 7.02% on Wednesday, up 3 basis points (bps) from a week ago.
While refinance applications dropped 3% from the previous week, they remained 119% higher on a year-over-year basis. But the bump in purchase demand also caused the refinance share of mortgage activity to drop by 220 bps during the week. Refis accounted for 38.8% of all applications last week.
“Purchase activity drove overall applications higher last week, as conventional purchase applications picked up pace and mortgage rates declined for the first time in over two months,” Joel Kan, MBA’s vice president and deputy chief economist, said in a statement.
“With the growth in for-sale inventory and signs that the economy remains strong, buyers have remained in the market even though rates have increased recently. The increase in conventional purchase applications helped push the average purchase loan size to $439,200, its highest level in almost a month. The decline in refinance activity was driven by pullbacks in FHA and VA refinances. Applications were significantly higher than a year ago by most measures, but this was compared to the week of Thanksgiving 2023, which was a week earlier than this year’s holiday.”
Adjustable-rate mortgages (ARMs) increased to 6.6% of applications. But government loans saw their shares shrink. Federal Housing Administration (FHA) loans shed 60 bps during the week to represent 16% of all applications while U.S. Department of Veterans Affairs (VA) loans were down 120 bps to 12.4% of applications.
The MBA reported that the average contract interest rate for 30-year fixed-rate loans with conforming balances ($766,550 or less) dropped by 4 bps during the week to 6.86%. Rates for 30-year jumbo loans (balances above $766,550) decreased by 6 bps and averaged 6.97%.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) decreased to 6.86 percent from 6.90 percent, with points remaining unchanged at 0.70 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
The Federal Housing Finance Agency (FHFA) this week announced changes to the conforming loan limits for 2025. Starting Jan. 1, Fannie Mae and Freddie Mac will purchase loans with balances up to $806,500 — a 5.2% increase from the current cap that is consistent with home-price increases.
