Mortgage Apps: Rates Jump Higher, Buyers Look To Lock-In

Bottom Line: Mortgage applications rose last week, despite the 30-year mortgage rate jumping over 20bps to 4.16%. While the prior week was likely depressed due to difficult seasonal adjustments around the Veteran's Day holiday, purchase applications rose nearly 19% while refnancing applications fell 3%. This likely shows a rush to "lock-in" mortgage rates that are still historically low. Mortgage modelers often assume a "media effect", the idea that would-be home buyers take their time when rates are falling but quickly make decisions to buy when rates start to move higher. While one week does not a trend make, we may be seeing that in the data. The MBA Mortgage Applications Index ROSE by 5.5% during the week ended November 18 to 460.3, moderately below its 13 week average of 511.2 but 9.6% ABOVE its year ago level. The Purchase Index ROSE by 18.8% to 234.1, moderately above its 13 week average of 218.0 and 10.6% ABOVE its year ago level. The level of purchase activity had stayed quite low after the crisis until 2015 when it started to rise. But that trend has lost momentum since mid-2016. The Refinance Index FELL by 3.1% to 1,754. With this decline, refinancing activity is sharply below its 13 week average of 2,195 but 8.8% ABOVE its year ago level. Contract Mortgage Rates ROSE with the 30-year fixed rate increasing by 21 bps to 4.16% and with the 15-year fixed rate increasing by 20 bps to 3.35%.