Inman News
Rebounding mortgage rates didn’t stop buyers from shopping for deals last week, with requests for purchase loans up 6% last week compared to the week before and 31% from a year ago
- The Mortgage Bankers Association reports purchase loan applications rose 6 percent week-over-week and 31 percent year-over-year last week, marking November’s strongest start since 2022 despite higher mortgage rates.
- Conventional, FHA and VA loan requests all increased as buyers respond to more inventory and slower sales price growth, MBA Deputy Chief Economist Joel Kan stated.
- Refinance applications declined 3 percent week-over-week but remain 147 percent higher than a year ago; mortgage rates hit a 2025 low of 6.12 percent on Oct. 28 before rebounding amid Fed rate cut doubts.
- Rising unemployment and paused government economic data complicate Fed decisions on rate cuts, while Pantheon Macroeconomics warns unemployment may climb to 4.75 percent early next year despite low jobless claims.
Homebuyers didn’t let rebounding mortgage rates stop them from shopping for deals last week, with demand for purchase loans at the highest level for this time of year since 2022, the Mortgage Bankers Association reported Wednesday.
The MBA’s Weekly Mortgage Applications Survey showed applications for purchase loans were up by a seasonally adjusted 6 percent last week when compared to the week before, and 31 percent from a year ago.
“Purchase applications for conventional, FHA, and VA loans increased, as potential homebuyers continue to shop around, particularly in markets where inventory has increased and sales price growth has slowed,” MBA Deputy Chief Economist Joel Kan said in a statement. “Based on the unadjusted purchase index for the week, this was the strongest start to November since 2022.”
Requests to refinance were down 3 percent week over week but remained up 147 percent from a year ago.
Mortgage rates spiked in April when tariffs were announced and remained elevated for much of the spring homebuying season, but have gradually retreated since June on expectations that the Fed would start bringing down short-term rates as the economy cools.
Mortgage rates hit bottom on Oct. 28
Mortgage rates tracked by Optimal Blue hit a new 2025 low of 6.12 percent on Oct. 28 but have been on the rebound since then over worries that Fed policymakers won’t approve a third 2025 rate cut when they meet again on Dec. 10.
The CME FedWatch Tool, which tracks futures markets to predict the probability of future Fed moves, showed that investors on Wednesday put the odds of a Dec. 10 rate cut at 65 percent, down from 92 percent on Oct. 10.
In deciding whether to cut rates again next month, Fed policymakers must weigh the inflationary impacts of tariffs against rising unemployment.
During the government shutdown that began Oct. 1, policymakers have had to do without some of the data they typically base their decisions on, with reports from the Bureau of Labor Statistics, Bureau of Economic Analysis and Census Bureau all suspended.
Unemployment on the rise
The last official unemployment data showed the unemployment rate rising to 4.3 percent in August, with 7.384 million Americans out of work.
State-level jobless claims data “continue to paint a broadly reassuring picture while the official labor market data have been paused,” economists at Pantheon Macroeconomics said in their Nov. 12 U.S. Economic Monitor.
While state-level jobless claims would seem to weigh against a December rate cut, Pantheon forecasters think the labor market is “faring worse than claims imply,” because unemployment claims exclude:
- 154,000 federal workers who accepted deferred resignation offers and can’t claim unemployment benefits
- Young workers, including recent graduates, who are struggling to find their first jobs but don’t qualify for unemployment
- Gig economy workers who are classified as self-employed, although many would prefer to be full-time salaried workers.
In addition, a dearth of job postings has dented payroll growth and led to a sharp rise in the number of people who have been unemployed for more than 26 weeks and can’t collect unemployment, Pantheon forecasters noted.
“For all these reasons, then, we take little reassurance from the relatively low level of [jobless] claims, and still expect the unemployment rate to continue to climb gradually, peaking at about 4 3/4 percent early next year,” Pantheon forecasters warned.