According to a survey published by the Mortgage Bankers Association (MBA) on Nov. 17, refinance mortgage loan applications declined 31% over the past year during the week ending November 12. Refinancing applications decreased by 5% from the previous week.
In the meantime, the number of applications for new homes declined by 6% in the past year. They were, however, up 2% from the previous week.
TheI Market Composite Index, a measure of mortgage loan application volume, fell by 2.8% compared with the previous week and by 23% over the past year.
Joel Kan, MBA associate vice president of economic and industry forecasting, said that many refinancing applications had also decreased as mortgage rates rose after declining for the past two weeks.
In the latest week, the average 30-year fixed rate for conforming loans ($548,250 or less) increased to 3.20%, four basis points higher than the previous week. Jumbo loans (more than $548,250) remained at 3.26%.
According to Kan, the decline in activity was mainly due to a drop in conventional and FHA refinance applications, partially offset by an increase in Department of Veterans Affairs (VA) home loan refinance applications.
In late fall, when home buying activity typically slows, conventional and government loan applications actually increased. Increased sales are expected to continue in the coming weeks, according to the survey.
In today's housing market, investors in real estate are more active than ever, and it is creating a challenging environment for individual homebuyers. Per the report, investors spent a record $63.6 billion on property purchases in the third quarter, an increase of 78% over the same period last year. They accounted for 18.2% of all U.S. home purchases during this period, attracted by increasing returns.
According to Sheharyar Bokhari, a senior economist at Redfin, rising home prices have created opportunities for investors to reap significant returns. For the same reason, more Americans are opting to rent, which also creates opportunities for investors, Bokhari explained.