MBA report points to volatility in rates as the reason for the decrease in applications
Applications to refinance declined over the week as mortgage activity continued to shift back to a purchase market.
Overall mortgage application volume posted a 4% seasonally adjusted decline for the week ending December 10, the Mortgage Bankers Association’s latest survey revealed. Refinance activity was down by 6% from the previous week, while purchase applications increased by 1% week over week.
Last week, the 30-year long-term mortgage rate inched down by one basis point to 3.10%, according to the Freddie Mac Primary Mortgage Market Survey. Rates have fluctuated over recent weeks but remained low.
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However, Joel Kan, MBA’s associate vice president of economic and industry forecasting, noted that the volatility in interest rates had led to a 41% year-over-year decline in mortgage applications.
Of the total applications, the refinance share dropped from 63.9% to 63.3%, while the adjustable-rate mortgage (ARM) share of activity increased to 3.4%. The FHA share experienced a three basis point decrease to 9.6%, VA loan activity down by one basis point to 10.6%, and the USDA share was unchanged at 0.5% from the previous week.
“Purchase activity increased slightly, as a 1.7% rise in conventional applications offset a 1.6% decline in applications for government loans. The strength in conventional purchase activity continues to support higher loan balances, which moved back over $400,000. Housing demand remains strong as the year comes to an end amid tight inventory and steep home-price growth.”
