Mortgage applications to purchase a home increased last week, according to data from the Mortgage Bankers Association’s (MBA). It’s an about-face from the week prior, when purchase applications dipped.
The MBA’s seasonally adjusted Purchase Index increased 6% for the week ending Nov. 7, compared with one week earlier. The unadjusted Purchase Index was up 3% on the week and was 31% higher than one year ago.
This comes as mortgage interest rates rose off their one-year lows to hit 6.22%, according to Freddie Mac. The increase broke a four-week stretch of declines, after Federal Reserve Chair Jerome Powell cast doubt on another rate cut this year.
“Purchase applications picked up almost 6% over the week to the strongest pace since September, despite mortgage rates increasing slightly,” says Joel Kan, MBA’s vice president and deputy chief economist. “Based on the unadjusted purchase index for the week, this was the strongest start to November since 2022.”
Kan says that purchase applications for conventional, FHA, and VA loans increased, particularly in markets where inventory has increased and sales price growth has slowed, indicating that prospective buyers continue to shop around.
Meanwhile, refinance activity decreased 3% from the previous week, but remained 147% higher than the same week one year ago, when mortgage rates were 57 basis points higher.
“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,” says Kan.
The refinance share of mortgage activity decreased to 55.6% of total applications from 57.0% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 7.8% of total applications.
The MBA’s Market Composite Index, a measure of total mortgage loan application volume, increased 0.6% last week compared with the prior week. On an unadjusted basis, the Index decreased 1% compared with the previous week.
The FHA share of total applications increased to 19.4%, up from 18.5% the week prior. The VA share of total applications decreased to 14.8% from 14.9% the week prior. The USDA share of total applications decreased to 0.2% from 0.3% the week prior.
Contract rates
According to MBA data, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) increased to 6.34% from 6.31%, with points increasing to 0.62 from 0.58 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate increased from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $806,500) increased to 6.46% from 6.43%, with points increasing to 0.38 from 0.33 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 6.14% from 6.13%, with points increasing to 0.76 from 0.73 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
The average contract interest rate for 15-year fixed-rate mortgages increased to 5.70% from 5.65%, with points increasing to 0.64 from 0.61 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
The average contract interest rate for 5/1 ARMs decreased to 5.50% from 5.56%, with points decreasing to 0.85 from 0.86 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
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.