Fixed-Rate Mortgage Activity Shows Upswing

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The Mortgage Bankers Association’s Weekly Application Survey, for the week ending November 8, 2019, showed a 5% increase in its Purchase Index and 13% increase in its Refinance Index from a week earlier on a seasonally adjusted basis. This increase occurred despite the slight increase in the 30-year fixed mortgage rate to 4.03%, thus reflecting growing optimism concerning the economy but also concern about rising rates1. Positive consumer sentiment is also reflected in an increase in the third quarter Housing Opportunity Index, reaching its highest level in three years.

According to the Mortgage Bankers Association, high home prices and low supply are why most activity is seen with loans with higher loan balances. Interestingly, this fall has also seen an uptick since mid-June in applications for fixed-rate mortgages of FHA and VA loans, continuing the gains since the beginning of the year.

As shown above, mortgage activity on government-backed loans had been diminishing for two years since the beginning of 2016. As of the end of the previous week, activity was almost four times what it was at the end of the first quarter of 1990, measured on a seasonally adjusted basis. This is an increase of 60 points, making it the largest weekly gain in over four years.


Notes:

  1. This fixed-mortgage rate measure applies to those fixed-rate mortgages with conforming loan balances of $484,350 or less.


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