U.S. mortgage rates decline for the first time in nine weeks, home purchase application index soars to a new high since February
The U.S. mortgage application index surged 12.4% in the week ending November 22, reaching 152.9, the highest level since February. This increase was primarily driven by the first decline in borrowing costs, with the 30-year fixed mortgage rate falling to 6.86%. Despite the improvement in mortgage costs, they remain above the levels prior to the Federal Reserve's interest rate cuts. The MBA noted that a strong economy and an increase in available inventory were also favorable factors. The overall market index rose by 6.3%, while the refinancing index declined by 2.6%
According to the Zhitong Finance APP, a measure of U.S. mortgage loan applications has surged to its highest level since February, as buyers seized the opportunity presented by a slight decrease in borrowing costs and an increase in housing options on the market.
Data released by the Mortgage Bankers Association (MBA) on Wednesday showed that for the week ending November 22, the purchase application index jumped 12.4% to 152.9. Although this is the largest increase since the beginning of 2023, the data often experiences significant weekly fluctuations around the holidays.
The MBA noted that borrowing costs decreased for the first time in nine weeks, with the contract rate for a 30-year fixed mortgage slightly falling to 6.86%.
The association stated that other favorable factors include a strong economy and an increase in inventory for sale. While the MBA did not cite this month's election as a factor, several builders mentioned during recent earnings calls that the uncertainty surrounding the presidential campaign is causing buyers to adopt a wait-and-see attitude.
Despite the improvement in mortgage costs, rates remain about 0.75 percentage points higher than the levels seen in mid-September before the Federal Reserve began cutting rates.
Following a series of strong economic reports that led investors to believe the Federal Reserve would gradually lower rates in the future, financing costs began to rise again. After Trump's election, mortgage rates continued to climb due to speculation that his policies would trigger inflation.
Combined with the purchase application data, the MBA's overall market index (which includes both purchase and refinancing applications) rose by 6.3%. The refinancing index declined by 2.6%