Mortgage applications soared in the last week of November as homebuyers took advantage of low interest rates following the Fed’s announcement that it would buy Fannie Mae and Freddie Mac debt and mortgage-backed securities.
Indeed, the latest survey from the Mortgage Bankers Association in Washington shows that its seasonally adjusted Market Composite Index, which measures total mortgage application volume, jumped 112.1% to 857.7 for the week ended Nov. 28 — its highest level since March.
Its refinance index climbed 38% to 361.1 while its purchase index rose 37.4% and its government purchase index increased 39.2%.
“When rates plummeted following the Fed’s announcement that it would buy GSE debt and MBS, many of those on the sidelines decided to quickly jump in and take advantage of lower rates before they began to rebound,” Orawin Velz, Associate vice president of economic forecasting at the MBA, said in a statement.
The average contract rate for 30-year fixed rate mortgages was 5.47%, down .52 percentage points from 5.99% the previous week – its biggest one-week decline since 1990.
Rates fell after the Federal Reserve unveiled plans to buy up to $500 billion of mortgage securities backed by government-sponsored enterprises and up to $100 billion in debt issued by Fannie, Freddie and the Federal Home Loan Banks.
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