Either eating turkey, Black Friday bargain hunting, or maybe both appear to have diverted many Americans from pursuing a mortgage last week. Applications for mortgages plummeted during the week ended November 28, a week that was shortened by the Thanksgiving Day holiday. Seasonally adjusted applications data from the Mortgage Bankers Association's (MBA's) Weekly Mortgage Application Survey also contain an adjustment to account for the holiday.
MBA said that its Market Composite Index, a measure of loan application volume, was down 7.3 percent on a seasonally adjusted basis from a week earlier. Unadjusted the Composite was down 37 percent, the largest drop since the first full week of 2014.
The Refinance Index was down 13 percent compared to the week ended November 21 and 60 percent of applications during the week for refinancing compared to 63 percent the week before.
Refinance Index vs 30 Yr Fixed
The seasonally adjusted Purchase Index did increase, rising 3 percent from the previous week, but the unadjusted Purchase Index dropped 32 percent from its level a week earlier and was 4 percent lower than during the same week in 2013.
Purchase Index vs 30 Yr Fixed
According to MBA the distribution of applications across mortgage products included a 9.3 percent share for FHA backed loans, 1 basis point less than the previous week. The VA share dropped from 10.3 percent to 9.4 percent while the USDA retained the same 0.8 percent share.
Interest rates during the week were mixed. The average contract interest rate for 30-year fixed-rate mortgages (FRM) with conforming loan balances of $417,000 or less, was 4.08 percent, the lowest level since May 2013. The previous week the rate had been 4.15 percent. Points increased to 0.28 from 0.25 and the effective rate was lower than during the previous week.
The average contract interest rate for 30-year FRM with jumbo loan balances (greater than $417,000) increased one basis point to 4.11. Points were down to 0.22 from 0.25 and the effective rate increased.
FHA-backed 30-year FRM had an average contract rate of 3.85 percent with 0.09 point. During the week ended November 21 the contract rate had been 3.90 percent with 0.13 point. The effective rate also decreased.
The average contract interest rate for 15-year fixed-rate mortgages slipped to 3.30 percent from 3.35 percent, with points remaining unchanged at 0.25. The effective rate decreased.
The share of adjustable rate mortgage (ARM) applications during the week fell from 7 to 6.7 percent of the total. The average contract interest rate for 5/1 ARMs increased to 3.07 percent from 3.06 percent, while points dropped to 0.32 from 0.41, bringing the effective rate down compared to the previous week.
MBA's survey, which has been conducted since 1990, covers over 75 percent of all U.S. retail residential mortgage applications. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100 and interest rate data assumes loans with an 80 percent loan to value ratio. Points include the origination fee.