Federal Reserve's rate cut 'did little to move the markets'
Rising mortgage rates appear to be stalling refinancing activity, even as mortgage applications rose slightly in the first weekly uptick in nearly two months, according to the Mortgage Bankers Association’s (MBA) latest survey for the week ending November 8.
MBA's Market Composite Index, which measures mortgage loan application volume, saw a 0.5% increase on a seasonally adjusted basis compared to the prior week. However, on an unadjusted basis, applications dipped by 2%.
“Mortgage rates continued to increase last week, driven by higher Treasury yields as financial markets digested the likely impacts of a Trump presidency,” said Joel Kan, vice president and deputy chief economist for MBA. “The Federal Reserve’s 25-basis-point rate cut was already anticipated and did little to move the markets.”
The association reported that the average rate for 30-year fixed-rate mortgages with conforming loan balances rose to 6.86%, the highest since July 2024.
Despite higher rates, purchase applications gained some traction, up 2% from the previous week on a seasonally adjusted basis. FHA purchase applications rose 3%, and VA loan applications increased 9%, which Kan said may have been helped by lower FHA mortgage rates. Conventional purchase applications also showed slight growth. The unadjusted purchase applications, however, dropped by 2% week-over-week.
“FHA mortgage rates bucked the overall trend and were lower over the week, which likely helped some borrowers. Conventional purchase applications were also up slightly. Meanwhile, the upward climb in rates led to refinance activity falling to its lowest level since May 2024,” he added.
Refinance activity continued to show the impact of rising rates, with MBA’s refinance index dropping 2% from the previous week and reaching its lowest level since May 2024. However, refinance applications were still up 43% compared to the same week last year, reflecting ongoing efforts by some homeowners to lock in favorable terms despite rate hikes.
Read more: Housing industry split on impact of latest Fed rate cut
The breakdown of the week’s mortgage activity showed the refinance share of applications holding steady at 39.9%, while adjustable-rate mortgage (ARM) applications dropped to 6.5% of total applications. The share of FHA applications grew to 16.0% from 15.5% the previous week, and VA applications made up 13.3% of total applications, up from 12.5%. The USDA share remained unchanged at 0.5%.
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