Big Jump in Rates Not Hitting Mortgage Apps... Yet

Mortgage rates rose sharply during the week ended November 6.  Most contract rates had an average basis point increase near double digits, returning to levels last seen in August and September.  Mortgage application volume declined, but the overall response was unremarkable with most components dipping only a percentage point or two.  

The Mortgage Bankers Association (MBA) reported that its Market Composite Index, a measure of application volume, was down 1.3 percent from the week ended October 30 on a seasonally adjusted basis and decreased 2.0 percent unadjusted. 

MBA headlined its press release "Refinance Applications Decrease" and they did, although by only 2 percent from the previous week while the refinance share of applications inched up by 10 basis points to slightly under 60 percent.  The seasonally adjusted Purchase Index rose 0.1 percent by dropped by 3 percent unadjusted when compared to the previous week.  The unadjusted Purchase Index was 18 percent higher than during the same week in 2014.  

Refinance Index vs 30 Yr Fixed

Purchase Index vs 30 Yr Fixed

The FHA share of total applications increased to 14.1 percent from 13.2 percent.  At the same time the VA share dropped by 1 percentage point to 10.9 percent. The USDA share of total applications remained unchanged from 0.7 percent the week prior.

Both contract and effective interest rates increased on average from the previous week.  The average contract interest rate for 30-year fixed-rate mortgages (FRM) with conforming loan balances ($417,000 or less) increased to 4.12 percent, its highest level since August 2015, from 4.01 percent.  Points decreased to 0.45 from 0.47

Jumbo 30-year FRM, loans with loan balances greater than $417,000, had a rate that rose 14 basis points to 4.04 percent, the highest level since September 2015.  Points increased to from 0.34 to 0.38.  

FHA-backed 30-year FRM had an average contract rate of 3.87 percent, the also the highest level since September, with 0.25 points.  The previous week the rate was 3.81 percent with 0.32 point.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.35 percent, its highest level since August 2015, from 3.24 percent.  Points declined to 0.35 from 0.37.  

Adjustable rate mortgages (ARM) garnered a 6.6 percent share of mortgage applications during the week, down 0.1 percent from the week before.  The  average  contract  interest rate  for  5/1  hybrid ARMs  increased  to  3.22  percent,  its  highest  level since February 2015, from 3.12 percent.  Points increased to 0.28 from 0.25.  

MBA's Weekly Application Volume Survey has been conducted since 1990 and covers over 75 percent of all U.S. retail residential mortgage applications.  Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100. Interest rate data is based on loans with an 80 percent loan-to-value ratio and points include the origination fee.