Mortgage Demand Drops Amid Interest Rate Volatility
- Mortgage applications increased overall during the week ending November 3, 2023, largely due to a important jump in refinance applications.
- "The average loan size for refinance applications was at its highest level in six weeks, as borrowers with larger loans continued to seek ways to lower their monthly...
- while refinance activity drove the overall increase, applications for a mortgage to purchase a home fell 1% for the week.
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Mortgage Applications Rise as Borrowers Seek Lower Payments
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Published November 8, 2023, at 6:41 AM PST
Refinance Applications Surge
Mortgage applications increased overall during the week ending November 3, 2023, largely due to a important jump in refinance applications. This increase comes as borrowers attempt to capitalize on recent dips in interest rates, seeking to lower their monthly mortgage payments. According to the Mortgage Bankers Association (MBA), the increase in refinance applications is a direct response to rates being lower than they were at this time last year.
“The average loan size for refinance applications was at its highest level in six weeks, as borrowers with larger loans continued to seek ways to lower their monthly payments,” stated Joel Kan, an MBA economist, in a press release.
Purchase applications Show Slight Decline
while refinance activity drove the overall increase, applications for a mortgage to purchase a home fell 1% for the week. Though, purchase applications remain 26% higher than the same week in 2022, indicating continued demand despite affordability challenges.
“Purchase applications declined slightly from a week ago, however, there was a slight increase in FHA purchase applications as prospective homebuyers continue to seek loan options to help manage challenging affordability conditions,” Kan added.The Federal Housing Management (FHA) offers loan programs designed to assist first-time homebuyers and those with limited financial resources.
Here’s a breakdown of recent application trends:
| application Type | Weekly Change | Year-over-Year Change |
|---|---|---|
| Purchase | -1% | +26% |
| Refinance | +12% | +37% |
Interest rate Outlook
Mortgage rates experienced a slight increase at the beginning of the week.The direction of rates for the remainder of the week is expected to be heavily influenced by the release of key economic data on employment scheduled for Wednesday, November 8, 2023. Strong employment numbers could push rates higher, while weaker data might lead to a decrease.
Recent trends in 30-year fixed mortgage rates (as of November 7, 2023):
- Current Rate: 7.90% (average) Source: Freddie Mac
- Previous Week: 7.79%
- One Year Ago: 7.08%