Mortgage applications revved up for the week ending Nov. 5, rising 5.5%, according to the Mortgage Bankers Association weekly survey published on Wednesday.
The increase was mainly driven by the refi index growing by 7% from the previous week, though it was 28% lower than the same week one year ago, the report said.
Concurrently, the purchase index grew by 3% from the week prior.
Joel Kan, associate vice president of economic and industry forecasting, remarked in a statement that the decrease in mortgage rates, pushed the refi and purchase index upwards.
“The 30-year fixed rate decreased to 3.16% and has declined 14 basis points over the past two weeks,” Kan said. “Although overall activity remains close to January 2020 lows, homeowners acted on the decrease in rates.”
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He added, “Purchase applications were also strong last week, increasing just under 3% and down only 4% from last year’s pace. The dip in rates might have helped to bring some buyers back into the market, but housing inventory is still extremely low and price growth remains elevated.”
Freddie Mac‘s PPMS Mortgage Survey published earlier this week found that the average 30-year-fixed rate mortgage dropped to 3.09% during the same week.
In line with rates decreasing, the refi share of mortgage activity grew to 63.5% of total applications from 61.9% the previous week, while the adjustable-rate mortgage (ARM) share of activity dipped to 3.1% of total applications.
With the Federal Reserve’s announcement that they will begin to taper its $120 billion monthly asset purchases, it is likely that increased refi activity may be on its last breath. The MBA estimates that refis will amount to $2.26 trillion in 2021 and notably dip to $860 billion in 2022.
Regarding government-guaranteed lending, the FHA share of total applications decreased to 8.8% from 9.2% the week prior, the report found.
On the other hand, the VA share of total applications increased to 10.2% from 9.9% the week prior. The USDA share of total applications remained unchanged from 0.5%, the trade group said.