Even as long-term mortgage interest rates rested near their lowest levels in over a year, it wasn’t enough to bring more borrowers to the mortgage table during the Thanksgiving week, according to the latest data from the Mortgage Bankers Association.
Perhaps all the tryptophan from holiday turkeys kept potential borrowers too sleepy to take action. Whatever the cause, the MBA Market Composite Index, a measure of all mortgage loan application volume took a serious hit in the week ended November 28, 2014, falling 7.3 percent on a seasonally adjusted annual basis from the week before. That includes an adjustment for the Thanksgiving holiday.
The dramatic drop was led by a 13 percent decline in the Refinance Index. Refinance requests made up 60 percent of all applications, down from 63 percent the previous week.
On an adjusted basis the Purchase Index actually grew 3 percent, with homebuyers squeezing in a few sales before the holiday, but that small increase was not enough to compensate for the plummet in refinance activity.
That is somewhat surprising considering that Freddie Mac reported the average rate on a 30-year fixed rate mortgage fell to 3.97 percent, excluding fees in the same week, very near the all-time low for 2014. Apparently rates have been low enough for long enough that homeowners did not feel a rush to take advantage of sub-4 percent rates in the latest week. It will be interesting to see if the remainder of the holiday season dampens the mood for refinancing as well.
The MBA data also showed that adjustable rate mortgages (ARMs) remain very unpopular with only ARM requests making up just 6.7 percent of all applications. FHA loan applications also fell slightly in the past week, declining to 9.3 percent from 9.4 percent the previous week. VA loan requests accounted for another 9.4 percent of all applications, a decrease from 10.3 percent the week before.