Mortgage applications declined 7.2% for the week ending Nov. 26, reflecting a lower appetite for refinances, according to the Mortgage Bankers Association (MBA) survey published on Wednesday.
The drop was mainly driven by the refinance index declining by 14.8% from the previous week, on a seasonally adjusted basis. Concurrently, the purchase index grew by 5.1% from the week prior.
However, mortgage applications declined across the board in comparison to a year ago. The overall market composite index dipped 29.6% on a seasonally adjusted basis. Refinance apps fell 40.7% year over year, and purchase apps decreased 9.4% in the same period.
Joel Kan, the MBA’s associate vice president of economic and industry forecasting, said mortgage rates rose for the third week in a row, reducing incentives for many borrowers to refinance. “Over the past three weeks, rates are up 15 basis points, and refinance activity has declined over 18%,” he said.
Regarding purchase activity, he said the increase in applications was driven by a 6% growth in conventional loans apps, which tend to be larger than government loans. The average loan amount increased to $414,700, the highest since February.
The trade group estimates the average contract 30-year fixed-rate mortgage for conforming loans ($548,250 or less) increased to 3.31%, seven basis points higher than the previous week. For jumbo mortgage loans (greater than $548,250), it went to 3.27% from 3.28%.
Refinances represented 59.4% of total applications, down from 63.1% the previous week. VA loans consisted of 10% of the share, decreasing three basis points. Meanwhile, FHA loans went from 8.6% to 8.9% in the period. The USDA share was at 0.5% of the total.