WASHINGTON (12/5/13)--Activity in the mortgage market dropped off considerably during the shortened Thanksgiving week: The Mortgage Bankers Association's Market Composite Index declined by a seasonally adjusted 12.8% for the week ending Nov. 29. The adjustment accounted for the Thanksgiving holiday.
The measure's two components, the refinance index and the purchase index, fell by 17.5% and 4.1% respectively.
Refinance applications, which accounted for 63% of total applications, were at their lowest level since the week ending Sept. 6.
The weekly decline in activity is part of a longer-term trend. A four-week moving average of refinance activity fell by 10.3% over the last month, and is 60% lower than it was the same time last year. A four-week moving average of purchase applications increased by 3.4% over the last month, but is lower by 7.1% on a year-over-year basis.
Underlying the decreased demand are rising mortgage interest rates. The four-week moving average of the purchase applications index is about 14% lower than was in early May, when interest rates began to rise considerably. Recent National Association of Realtors data on pending home sales appears to confirm that demand is tepid, as rising interest rates and housing prices make home ownership more expensive (Economy.com Dec. 4).
For the week ending Nov. 29, interest rates on 30-year, fixed-rate mortgages rose by three basis points (bp) to 4.51%, according to the MBA data. The rate is up by 19 bp over the past four weeks and 99 bp on an annual measure. Interest rates on 30-year, fixed-rate jumbo mortgages increased by one basis point to 4.49%. The five year adjustable-rate mortgage fell by nine bp this week, but is 47 basis points higher than it was the same time last year.