The election quickly brought an end to weeks of lackluster mortgage application reports as the majority of mortgage product rates reached new highs in the latest Mortgage Bankers Association Weekly Mortgage Applications Survey for the week ending Nov. 11.
"Following the election, mortgage rates saw their biggest week over week increase since the taper tantrum in June 2013, and reached their highest level since January of this year,” said David Stevens, president and CEO of the MBA. “Investor expectations of faster growth and higher inflation are driving the jump up in rates, and rates have now increased for five of the past six weeks, spurring a commensurate drop in refinance activity."
Moving to its highest level since January 2016, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) surged to 3.95%, from 3.77%.
This week’s report echoes Zillow’s recent mortgage rate report, which recorded that the 30-year fixed mortgage interest rate spiked in the aftermath of Trump’s election, rising from 3.38% on Tuesday to 3.8% on Monday morning.
Similarly, the average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to its highest level since January 2016, rising to 3.89%, from 3.75%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to its highest level since April 2016, 3.73%, from 3.61%, while the average contract interest rate for 15-year fixed-rate mortgages increased to its highest level since March 2016, 3.15%, from 3.03%.
The average contract interest rate for 5/1 ARMs increased to its highest level since March 2016, 3.11%, from 2.92%.
As Stevens noted, with rates rising, refinance applications decreased. The refinance share of mortgage activity dropped to 61.9% of total applications from 62.3% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 4.7% of total applications.
The Refinance Index decreased to its lowest level since March 2016, dropping 11% from the previous week. But the purchase index didn’t perform too differently, decreasing 6% from one week earlier to its lowest level since January 2016.
Overall, mortgage applications decreased 9.2% from one week earlier.
The Federal Housing Administration’s share of total applications increased to 12.2% from 11.6% the week prior. The Veteran Affairs’ share of total applications increased to 12.6% from 12.3% the week prior, and the United States Department of Agriculture’s share of total applications decreased to 0.6% from 0.7% the week prior.