Mortgage loan application volume rose last week, responding to a dip in rates, according to the Mortgage Bankers Association’s weekly survey.
The adjusted Market Composite Index, a measure of mortgage loan application volume, increased by 2.7%.
The 30-year fixed rate once again fell below 7%, propelling potential buyers into action. Rates have been going back and forth between the high 6.90s and low 7s for several weeks. This drop from 7.14% to 6.90% is the largest single-week decline since July 2022.
The adjusted purchase index rose 4%, while the unadjusted purchase index decreased by 10% and was 46% lower YOY.
“Application activity, adjusted to account for the Veterans Day holiday, increased in response to the drop in rates – driven by a 4% rise in home purchase applications. Purchase applications increased for all loan types, and the average purchase loan dipped to its smallest amount since January 2021,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist.
Slowing inflation pushed treasury yields lower, resulting in a rate downturn. Producer prices increased less than expected in October thanks to services falling for the first time in almost two years.
“The PPI read certainly adds more fuel to the fire for those who feel we may finally be on a downward inflation trend,” Mike Loewengart, Morgan Stanley’s head of model portfolio construction, said in a statement.
Before that, the Consumer Price Index showed a surprise dip in inflation to 7.7% YOY, giving Wall Street some much-needed optimism.
“Refinance activity remained depressed, down 88% over the year. There is very little refinance incentive with rates so much higher than last year,” Kan added.
Refinances fell another 2% on top of the previous week’s 4% drop. Refis made up just 27.6% of total applications.
The ARM share of activity declined to 10.6%, wiping out gains from the week prior.
The FHA share of total applications increased from 13.3% to 13.5%, with an average interest rate of 6.93%.
The VA share rose to 10.6% from 10.3%, and the USDA share inched up to 0.6%.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances fell from 7.14% to 6.90%.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances increased from 6.50% to 6.51%, and for 5/1 ARMs fell from 5.87% to 5.73%.