Mortgage Apps: Continued Hints of Rate Impulse

Bottom Line:  Applications fell in the first full week following the Thanksgiving holiday, led lower by applications for purchases. The average effective 30-year mortgage rate was down to 6.6%, roughly 50bps below its high of early November. Refinancing applications rose nearly 5%. While still barely a blip given how low refinancings have been, the boost shows that even with mortgage rates some 300+ basis points above the prevailing mortgage outstanding, there is still some response when rates move lower. Importantly, interest rate volatility has edged lower, and secondary mortgage market spreads to Treasuries have been stable at levels notably tighter than the wides seen this Fall. Overall, the mortgage market remains extremely quiet, but there are hints that if and when rates move sustainably lower, there will be an uptick, given purchase demand and the need for refinancings.The MBA Mortgage Application Index FELL -1.9% to 204.0, BELOW the 13-week average of 219.0 and -66.9% BELOW the year-ago level. Non-seasonally adjusted the index ROSE sharply , UP 35.8%.The Purchase Index FELL -3.0% to 176.0, BELOW the 13-week average of 176.0 and -40.5% BELOW the year-ago level.The Refinancing Index ROSE 4.7% to 341.0, BELOW the 13-week average of 419.0 and -86.4% BELOW the year-ago level.The effective (adjusted for points paid) 30-year mortgage rate FELL -8bps to 6.6%, BELOW the 13-week average of 6.93% but 94bps ABOVE the year-ago level.
 
Current coupon yields in the secondary market were down -25.0 bps last week, closing at 4.89%, and were up 19.0 bps this week through Tuesday.