The demand for a home loan continues to take an up and down path as applications decreased 1.4% for the week ending Nov. 28, according to the Mortgage Bankers Association. This is down from the week prior when it saw applications increase 0.2%. The total is also adjusted for the Thanksgiving holiday.
The Market Composite Index, a measure of mortgage loan application volume, decreased 1.4% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 33% compared with the previous week.
The Refinance Index decreased 4% from the previous week, but was 109% higher than the same week one year ago. The seasonally adjusted Purchase Index increased 3% from one week earlier. The unadjusted Purchase Index decreased 32% compared with the previous week and was 17% higher than the same week one year ago.
The decrease in new home loan applications and refinancing comes as mortgage interest rates for a 30-year fixed home loan edged down to 6.23% for the week ending Nov. 26, according to Freddie Mac.
The Federal Housing Adminstration (FHA) share of total applications decreased to 18.3% from 18.8% the week prior. The Veterans Affairs loans share of total applications decreased to 15% from 15.4% the week prior. The USDA share of total applications decreased to 0.3% from 0.4% the week prior.
“Mortgage rates moved lower in line with Treasury yields, which declined on data showing a weaker labor market and declining consumer confidence. The 30-year fixed mortgage rate declined to 6.32 percent after steadily increasing over the past month,” said Joel Kan, MBA’s vice president and deputy chief economist.
“After adjusting for the impact of the Thanksgiving holiday, refinance activity decreased across both conventional and government loans, as borrowers held out for lower rates.”
Contract rates
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) decreased to 6.32% from 6.40%, with points decreasing to 0.58 from 0.60 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $806,500) decreased to 6.40% from 6.49% the week prior, with points decreasing to 0.40 from 0.55 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 6.12% from 6.15%, with points decreasing to 0.73 from 0.79 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 5.73% from 5.80%, with points decreasing to 0.64 from 0.72 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
The average contract interest rate for a 5/1 ARM decreased to 5.40% from 5.44% a week earlier, with points decreasing to 0.23 from 0.54 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
“Purchase applications were up slightly, but we continue to see mixed results each week as the broader economic outlook remains cloudy, even as cooling home-price growth and increasing for-sale inventory bring some buyers back into the market.”
The October national median list price stands at $424,200, according to Realtor.com® data. Active listings rose 15.3% year over year, which marks the 24th straight month of gains.
Mortgage rates calculated
Mortgage rates are calculated by various factors in the economy, and the length of your loan will also figure into the mortgage rate you qualify for.
The 30-year mortgage rate is tied to the yield of the 10-year Treasury note, according to Fannie Mae. As the yield on the 10-year Treasury note moves, mortgage rates follow.
The yield on the 10-year Treasury note is determined by expectations for shorter-term interest rates in the economy over the duration of a bond, plus a term premium.