Mortgage rates—and applications—barely moved last week.
Total application volume fell 0.9 percent from the previous week on a seasonally adjusted basis, according to the Mortgage Bankers Association.
Applications to refinance, which saw a brief surge on lower rates in October and then a precipitous drop when rates rose again this month, fell 2 percent from the previous week. Mortgage applications to purchase a home rose 1 percent from the previous week but are still 11 percent below year-ago levels.
A bright spot in the mortgage market today appears to be for veterans. Loans guaranteed by the Department of Veterans Affairs rose to 11 percent of total applications. Usually loans backed by the government mortgage insurer, the FHA, are more popular, but its share came in at 9.6 percent last week. Higher fees and insurance premiums have kept many borrowers away from even this low down-payment loan option.
VA loans require no down payment in most cases, and do not require mortgage insurance. This may be why they’ve gained popularity as home prices continue to rise.
“Apropos of Veteran’s Day, the VA share of the market reached a new high,” said Michael Fratantoni, chief economist for the Mortgage Bankers Association. “VA’s share has exceeded FHA’s share of loan applications for the last three weeks.”
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.19 percent last week from 4.17 percent the previous week. Positive economic news recently, including the October employment report, has pulled investors away from the safety of the bond market, thereby pushing yields higher. Mortgage rates loosely follow the yield on the 10-year Treasury.