Without adjustment for seasonal factors, demand for both purchase loans and refinancing remains at their lowest levels since 2000, according to an MBA lender survey.

New markets require new approaches and tactics. Experts and industry leaders take the stage at Inman Connect New York in January to help navigate the market shift — and prepare for the next one. Meet the moment and join us. Register here.

Homebuyer demand for mortgages was up slightly last week for the fourth week in a row, as rates continue to retreat from 2022 highs on expectations that the Federal Reserve is poised to slow the pace of rate hikes, according to a weekly lender survey by the Mortgage Bankers Association.

The MBA’s Weekly Mortgage Applications Survey showed requests for purchase loans were up a seasonally adjusted 4 percent last week when compared to the week before but down 41 percent from a year ago. Requests to refinance were down 13 percent week over week and 86 percent from a year ago.

“The economy here and abroad is weakening, which should lead to slower inflation and allow the Fed to slow the pace of rate hikes,” MBA Deputy Chief Economist Joel Kan said in a statement. “Purchase activity increased slightly after adjusting for the Thanksgiving holiday, but the decline in rates was still not enough to bring back refinance activity.”

Mortgage rates retreat from 2022 highs

The Optimal Blue Mortgage Market Indices, which are updated daily, show rates for 30-year fixed-rate have fallen by more than half a percentage point since hitting a 2022 high of 7.16 percent on Oct. 24.

The MBA surveys show demand for purchase loans picked up for the first time in nearly two months during the week ending Nov. 4. After adjusting for seasonal factors, purchase loan applications have now posted week-over-week gains for four consecutive weeks.

But on an unadjusted basis, demand for both purchase loans and refinancing are at their lowest levels since 2000, Kan said. That’s because mortgage rates are nearly double what they were a year ago and because homebuyer demand usually cools in the fall.

For the week ending Nov. 25, the MBA reported average rates for the following types of loans:

  • For 30-year fixed-rate conforming mortgages (loan balances of $647,200 or less), rates averaged 6.49 percent, down from 6.67 percent the week before. With points remaining at 0.68 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans, the effective rate decreased to 6.68 percent.
  • Rates for 30-year fixed-rate jumbo mortgages (loan balances greater than $647,200) averaged 6.35 percent, up from 6.30 percent the week before. While points decreased to 0.61 from 0.74 (including the origination fee) for 80 percent LTV loans, the effective rate increased to 6.52 percent.
  • For 30-year fixed-rate FHA mortgages, rates averaged 6.57 percent, down from 6.66 percent the week before. While points increased to 1.14 from 1.01 (including the origination fee) for 80 percent LTV loans, the effective rate decreased to 6.90 percent.
  • Rates for 15-year fixed-rate mortgages averaged 6.02 percent, down from 6.08 percent the week before. With points decreasing to 0.69 from 0.70 (including the origination fee) for 80 percent LTV loans, the effective rate also decreased to 6.19 percent.
  • For 5/1 adjustable-rate mortgages (ARMs), rates averaged 5.48 percent, down from 5.78 percent the week before. While points increased to 0.89 from 0.73 (including the origination fee) for 80 percent LTV loans, the effective rate decreased to 5.81 percent.

Forecasters expect mortgage rates will continue to fall as the Fed dials back the pace of its short-term interest rate hikes. The Fed has raised the federal funds rate six times this year, bringing the target for the benchmark rate to between 3.75 and 4 percent.

In a Nov. 21 forecast, economists at Fannie Mae said they expect Fed policymakers to slow the pace of rate hikes at upcoming meetings and wrap the campaign up when the federal funds rate hits about 5 percent.

But even if the Fed stops hiking rates, it’s expected to continue “quantitative tightening” by trimming a balance sheet that ballooned to nearly $9 trillion during the pandemic.

Fed trimming its $9 trillion balance sheet

Assets held by the Federal Reserve through quantitative easing purchases now include $5.53 trillion in long-term Treasurys and $2.67 trillion in mortgage-backed securities. Source: Board of Governors of the Federal Reserve System, Federal Reserve Bank of St. Louis

During much of the pandemic, the Fed drove down long-term interest rates to historic lows by increasing its holdings of Treasurys by $80 billion a month and growing its mortgage-backed securities portfolio by $40 billion a month. After winding down its “quantitative easing” program, the Fed started raising the federal funds rate in March.

The Fed started trimming its balance sheet in June and is now letting $35 billion in mortgages and $60 billion in Treasurys roll off its books every month. This quantitative tightening could not only keep interest rates from falling but has the potential to create liquidity issues for banks.

“The Fed has expressed confidence it can draw down reserves in a way that will not affect its interest rate target,” Reuters reported. In a paper published last week, economists at the New York Fed, the Bank for International Settlements and Stanford University warned that “the way banks are managing liquidity, even in a time of ample liquidity, could challenge that view.”

Get Inman’s Extra Credit Newsletter delivered right to your inbox. A weekly roundup of all the biggest news in the world of mortgages and closings delivered every Wednesday. Click here to subscribe.

Email Matt Carter

Show Comments Hide Comments


Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription