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Mortgage Apps: Hints of Rate Impulse Suggest Strong Demand

November 30, 2022
Bottom Line:  Applications fell just slightly more than the MBA's seasonal adjustment factor for the Thanksgiving holiday, always a hard one to adjust for given the extent of Friday mortgage banking activity is hard to predict. While secondary market rates are higher this week, the average 30-year fixed-rate looks likely to hover around 6.75%, nearly 50bps lower than the highs set in October. And there are hints that the decline has been enough to spark a touch more purchase activity. While still historically low, it is a positive signal that demand for housing remains robust, if unaffordable for many at 7+% mortgage rates. There were risks that rates had moved so much, so fast, that housing purchase activity would effectively be shut off until rates retraced significantly, but these data suggest there should be steadily more activity at each level if and when mortgage rates decline.
The MBA Mortgage Application Index FELL slightly, DOWN -0.8% to 208.0, BELOW the 13-week average of 223.0 and -65.6% BELOW the year-ago level. Non-seasonally adjusted the index FELL sharply , DOWN -33.4%.
The Purchase Index ROSE 3.8% to 181.0, ABOVE the 13-week average of 178.0 but -41.7% BELOW the year-ago level.
The Refinancing Index FELL sharply, DOWN -12.9% to 326.0, BELOW the 13-week average of 436.0 and -85.9% BELOW the year-ago level.
The effective (adjusted for points paid) 30-year mortgage rate FELL -19bps to 6.68%, BELOW the 13-week average of 6.9% but 95bps ABOVE the year-ago level.
Current coupon yields in the secondary market were down -17.0 bps last week, closing at 5.14%, and were up 15.0 bps this week through Tuesday.
Article by Contingent Macro