Mortgage Demand Cools Slightly as Rates Hold Steady,But Remains Strong Compared to Last Year
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Mortgage application volume dipped slightly this week,as rising interest rates tempered refinance activity,but overall demand remains considerably higher than a year ago. This comes as sales price growth slows, though the market experienced its strongest start to November in two years, according to the Mortgage Bankers Association (MBA).
Mortgage Applications Decline
The MBA’s Weekly mortgage Applications Survey for the week ending November 10, 2023, showed a 3% decrease in overall application volume compared to the previous week. This decline was primarily driven by a drop in refinancing, which fell 3% for the week. Though, refinance applications were still a remarkable 147% higher than the same week in 2022, fueled by lower rates earlier in the fall. https://www.mba.org/news-and-research/news/news-detail/mortgage-applications-decrease-in-latest-mba-survey
“Higher mortgage rates did quell some refinance activity, as conventional and VA refinance applications declined over the week, and the average loan size for refinances dropped to its lowest level in over a month,” explained Joel Kan, MBA’s Vice President and Associate Staff Economist.
Purchase Activity Remains Robust
Despite the overall dip, purchase applications showed resilience. Kan noted that, based on the unadjusted purchase index, this was the strongest start to November since 2022.This suggests continued, though moderating, demand for homes.
Interest Rate Impact and Market Outlook
Mortgage rates have remained relatively stable this week, partially due to the bond market closure for Veterans Day. The market is now focused on the potential resolution of the government shutdown, which could trigger a reaction in interest rates. https://www.cnbc.com/select/mortgage-rates-today/
Currently, the average 30-year fixed mortgage rate is around 7.90% as of November 17, 2023, according to Freddie Mac. https://www.freddiemac.com/pmms Fluctuations in these rates will continue to be a key factor influencing mortgage demand in the coming weeks.
Key Takeaways
* Overall demand is down slightly: Mortgage applications decreased 3% week-over-week.
* Refinance activity cooled: Refinancing dropped 3%, but remains 147% higher year-over-year.
* Purchase demand is solid: The unadjusted purchase index indicates the strongest start to November since 2022.
* Rates are stable (for now): Mortgage rates have held steady, but the end of the government shutdown could cause movement.
Frequently Asked Questions (FAQ)
Q: What is the Mortgage Bankers Association (MBA)?
A: The MBA is a national association representing the real estate finance industry. They conduct weekly surveys of mortgage application activity, providing valuable insights into market trends. https://www.mba.org/
Q: What does the “unadjusted purchase index” measure?
A: The unadjusted purchase index reflects the total number of mortgage applications for home purchases, without accounting for seasonal variations. It’s a raw measure of demand.
Q: How do government shutdowns affect mortgage rates?
A: Government shutdowns can create uncertainty in the financial markets, potentially leading to volatility in interest rates. A resolution to the shutdown could bring clarity and a stronger reaction in rates.
Looking Ahead: The real estate market remains sensitive to interest rate movements. Continued monitoring of economic data and government policy decisions will be crucial for understanding the trajectory of mortgage demand and housing prices in the coming months.