Mortgage application activity declined in the week ending November 16, despite a recent uptick in housing affordability.
During the week, mortgage records indicate the overall application volume fell 2.2 percent, according to a report from the Mortgage Bankers Association. Much of this shift was caused by fewer requests for refinances.
Even though mortgage rates continue to hover near all-time lows, fewer borrowers chose to capitalize on this opportunity to restructure their loans into more favorable terms. The refinance share of activity declined 3 percent from a week earlier. Despite the change, refinances accounted for an 81 percent share of activity, which was unchanged from the previous period.
Meanwhile, on a seasonally adjusted basis, the Purchase Index increased 3 percent, the report said. However, on an unadjusted basis, activity plummeted roughly 11 percent, which could indicate the housing market is settling in for the slow season that often occurs in the fall and winter months.
Housing affordability on the rise
Although a limited number of borrowers attempted to purchase homes during the week, a recent report from the National Association of Home Builders indicates that housing affordability edged higher in the third quarter.
During the three-month period, roughly 74.1 percent of properties sold were affordable to consumers making the national median household income of $65,000, according to the report.
"The latest housing affordability data is good news on two fronts, because it shows that the share of homes affordable to median-income earners has risen even as home prices have continued to gradually recover from their recession lows," said NAHB chairman Barry Rutenberg. "This is primarily due to the fact that mortgage rates are now lower than we’ve seen them since the HOI was initiated more than a decade ago."
Although increased affordability may provide buyers with additional options in the near future, some local marketplaces had levels of affordability well above the national average.
For example, properties in Ogden-Clearfield, Utah, were the most affordable in the country in the third quarter, the report said. Property data indicates roughly 93.2 percent of homes sold during the period were within the price range of households making the median income in the area of $71,500.
In contrast, homes in New York City and the surrounding area were the least affordable, the report said.