Mortgage demand rises amid lowest rates in a month

Mortgage applications increased 2.8% on a seasonally adjusted basis during the week ending Nov. 29 as borrowers took advantage of improved inventory levels and the lowest mortgage rates in a month, according to data released Wednesday by the Mortgage Bankers Association (MBA).

Purchase loan activity drove total applications higher last week, which included an adjustment for the Thanksgiving holiday. The seasonally adjusted purchase index rose by 6% compared to the previous week. On an unadjusted basis, however, purchase applications were 21% lower than the same week last year.

“The recent strength in purchase activity continues, supported by lower rates and higher inventory levels, which are giving prospective buyers more options compared to earlier in the year,” Joel Kan, MBA’s vice president and deputy chief economist, said in a statement. “The purchase index increased for the fourth straight week to its highest level since January 2024.”

Meanwhile, refinance applications fell 1% from the previous week and were down 7% compared to the same week in 2023. Refis represented 38.7% of all applications last week. “Conventional refinance applications declined despite the lower rates, but FHA and VA refinances rebounded from a week ago,” Kan noted.

According to HousingWire‘s Mortgage Rates Center, the average 30-year conforming mortgage rate was 6.96% on Wednesday, down 6 basis points (bps) from one week ago.

The MBA reported that the average contract interest rate for 30-year fixed-rate loans with conforming balances ($766,550 or less) dropped by 17 bps during the week to 6.69%, the lowest level in more than a month, according to Kan. 

Rates for 30-year jumbo loans (balances above $766,550) decreased by 12 bps and averaged 6.85%. In 2025, jumbo loans will increase to a minimum size of $806,501 — a 5.2% increase from the current floor that is consistent with home-price increases, according to an announcement last week from the Federal Housing Finance Agency (FHFA).

Adjustable-rate mortgages (ARMs) accounted for 6% of applications last week, compared to 6.6% in the prior week. But government loans trended slightly upward. Federal Housing Administration (FHA) loans remained at 16% of all applications. U.S. Department of Veterans Affairs (VA) loans grew their share to 13.6%, compared to 12.4% the previous week. U.S. Department of Agriculture (USDA) loans dropped 1 bps to 0.4%.