Purchase mortgage applications continue their downward trend

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Mortgage applications decreased 0.5% from one week earlier as inadequate housing supply is putting upward pressure on home prices and affecting purchase activity, according to the Mortgage Bankers Association.

The MBA's Weekly Mortgage Applications Survey for the week ending Nov. 6 found that the refinance index increased 1% from the previous week and was 67% higher than the same week one year ago. The refinance share of mortgage activity increased to 70% of total applications from 68.7% the previous week.

"Mortgage application activity was mixed last week, despite the 30-year fixed rate decreasing to 2.98% — an all-time MBA survey low. The refinance index climbed to its highest level since August, led by a 1.5% increase in conventional refinances," Joel Kan, the MBA's associate vice president of economic and industry forecasting, said in a press release.

The seasonally adjusted purchase index decreased 3% from one week earlier, while the unadjusted purchase index decreased 5% compared with the previous week and was 16% higher than the same week one year ago.

"The purchase market continued its recent slump, with the index decreasing for the sixth time in seven weeks to its lowest level since May 2020," Kan said. "Homebuyer demand is still strong overall. However, inadequate housing supply is putting upward pressure on home prices and is impacting affordability, especially for first-time buyers and lower-income buyers."

Still, there is a bright spot when it comes to purchases. "The trend in larger average loan application sizes and growth in loan amounts points to the continued rise in home prices, as well as the strength in the upper end of the market," Kan added.

Adjustable-rate mortgage activity decreased to 2% from 2.1% of total applications, while the share of Federal Housing Administration-insured loan applications decreased to 10.6% from 11.1%.

The share of applications for Veterans Affairs-guaranteed loans increased to 12.6% from 12.2% and the U.S. Department of Agriculture/Rural Development share decreased to 0.4% from 0.5% the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased 3 basis points to 2.98%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400), the average contract rate decreased 5 basis points to 3.13%.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA remained unchanged at 3.08%. For 15-year fixed-rate mortgages, the average remained unchanged at 2.55%. The average contract interest rate for 5/1 ARMs increased to 2.79% from 2.67%.

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