Purchase applications pick up over Thanksgiving stretch

Mortgage applications decreased following a two-week rebound as a continued uptick in purchases was offset by an even greater decline in refinances, according to the Mortgage Bankers Association.

The MBA's Market Composite Index, a measure of weekly loan application volume based on surveys of association members, inched down a seasonally adjusted 0.8% for the period ending Nov. 25. Numbers included an adjustment for the Thanksgiving holiday. Activity came in 65.6% lower from the same week a year ago. 

The seasonally adjusted Purchase Index climbed 4%, increasing for the fourth consecutive week. With the 30-year conforming rate falling by 57 basis points since early November, renewed interest in home purchases has followed, according to Joel Kan, MBA vice president and deputy chief economist. But application volumes are still 41.7% below their level of a year ago.

"Purchase activity increased slightly after adjusting for the Thanksgiving holiday, but the decline in rates was still not enough to bring back refinance activity," Kan said in a press release.

The Refinance Index tumbled 13% week over week and now sits 87% below its level of a year ago. Meanwhile the share of refinances relative to overall activity dropped to 26.1% from 28.4% seven days earlier. Both weekly measures hit their lowest marks since 2000.

The share of adjustable-rate mortgage activity edged back up to 9% from 8.8% over the previous seven-day period. Interest in ARM products has slipped from recent months corresponding to the decline in interest rates, with shares previously over 10%. 

While seasonally adjusted conventional mortgage numbers saw virtually no change from the previous week, the Government Index fell back 3%, with their share of applications also retreating. Federal Housing Administration-backed applications made up 12.2% of volume, compared to 13.4% the prior week. But the share of loans guaranteed by the Department of Veterans Affairs was up to 11.2% from 10.5%, while applications coming through the U.S. Department of Agriculture declined to 0.5% from 0.6% of activity.

Meanwhile, the average loan amount recorded on new applications climbed its way up again over the holiday, even though purchase sizes inched down by a hair under $400,000. The average purchase-loan amount dropped to $399,900 from $400,100 the previous week. But mean refinance sizes saw a 1.6% rise to $275,100 from $270,700 seven days earlier. Overall average loan size equaled $367,400, a 1.1% increase from the prior week's $363,300. 

Interest rates for most loan types among MBA member lenders fell again last week, according to Kan. Current economic trends will likely hold back volatile surges over the coming months as the Federal Reverse deliberates its next steps, he said.

"The economy here and abroad is weakening, which should lead to slower inflation and

allow the Fed to slow the pace of rate hikes," he said. The next meeting of the Federal Reserve's Open Market Committee is scheduled for Dec. 13-14.

The average contract interest rate for the 30-year fixed-rate mortgage with balances below the current conforming amount of $647,200 fell to 6.49% over the Thanksgiving period from 6.67% the previous week. Points remained at 0.68 for 80% loan-to-value ratio loans.

The 30-year contract interest rate for jumbo applications with balances above the conforming amount averaged 6.35%, a weekly increase of 5 basis points. Points decreased to 0.61 from 0.74 seven days prior for 80% LTV loans.

The average rate for FHA-backed 30-year fixed mortgages came out to 6.57%, a drop of 9 basis points from 6.66% a week earlier, with points increasing to 1.14 from 1.01.

At the same time, mortgage-rate averages for 15-year contracts and ARMs similarly headed downward. The 15-year fixed rate settled at an average of 6.02%, falling from 6.08% seven days earlier. Points edged back to 0.69 from 0.7.