Mortgage application activity bounces back after two consecutive weeks of decline
Overall mortgage applications grew 3.2% week over week, driven by gains in purchase and refinance activity.
According to the Mortgage Bankers Association, the market composite index increased 3.2% on a seasonally adjusted basis for the week ending December 9. The refinance index jumped 3% from the previous week, and the purchase index was up by 4% week over week.
“Mortgage rates increased slightly after a month of declines, as financial markets reacted to mixed signals regarding inflation and the Federal Reserve’s next policy moves. The 30-year fixed rate inched to 6.42%, which is still close to the lowest rate in a month,” said Joel Kan, VP and deputy chief economist of MBA. “However, with rates more than three percentage points higher than a year ago, both purchase and refinance applications are still well behind last year’s pace.”
Compared to a year ago, refinance applications were down by 85%, and purchase applications were 38% lower than the same week last year.
“The ongoing moderation in home-price growth, along with further declines in mortgage rates, may encourage more buyers to return to the market in the coming months,” Kan said.
Fannie Mae chief economist Doug Duncan agreed, noting an improvement in the latest consumer home purchase sentiment index: “Consumers continue to expect mortgage rates to rise but home prices to decline, a situation that we believe will contribute to a further slowing of home sales in the coming months, as both homebuyers and home-sellers have a reason for apprehension,” he said. “We expect mortgage demand to continue to be curtailed by affordability constraints, while homeowners with significantly lower-than-current mortgage rates may be discouraged from listing their property and potentially taking on a new, much higher mortgage rate.”
