The mortgage industry saw a 4 percent drop in applications entering the month of November as rates ticked up to a new eight-year high, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending Nov. 2.
The 4 percent decrease was measured on a seasonally adjusted basis compared with the previous week earlier to the lowest level of new applications since December 2014, based on the Market Composite Index, the measure the survey relies on to assess mortgage loan application volume. On an unadjusted basis, the index dropped 2 percent compared with the previous week.
For refinances, there was a seasonally decline of 3 percent from the week prior, and the seasonally adjusted Purchase Index hit its lowest level since November 2016 after dropping 5 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the week prior and was 0.2 percent lower than the same week of the preceding year.
“Rates increased slightly last week, as various job market indicators showed a bounce back in job gains and an acceleration in wage growth in October. The survey’s 30-year fixed-rate, at 5.15 percent, was the highest since April 2010,” MBA Associate Vice President of Economic and Industry Forecasts Joel Kan said in a press release. “Application activity decreased over the week for both purchase and refinance applications, with the overall market index down to its lowest level since December 2014. The purchase index declined to its lowest level since November 2016, but remained only slightly below the same week a year ago.
“It’s evident that housing inventory shortages continue to impact prospective homebuyers this fall.”
There were market share decreases in refinances and loans insured by the Federal Housing Administration (FHA) of 30 basis points and 20 basis points, respectively, in terms of total loan applications. Conversely, adjustable-rate mortgage (ARM) and those insured by the Department of Veterans Affairs (VA) saw share activity increase by similar margins. The share U.S. Department of Agriculture market share remained unchanged from 0.7 percent the week prior.
The latest decrease in applications comes after a dip of 2.5 percent, seasonally adjusted, for the week ending Oct. 26. That decrease was coupled with a mixture of rising, falling and unchanging interest rates across loan types.