MBA sees improvement in weekly refinance applications
Applications for residential loans increased by 0.9% for the week ending December 16, according to the Mortgage Bankers Association.
MBA’s Market Composite Index, a measure of mortgage application volume, edged up 0.9% on a seasonally adjusted basis from the week before and was down 1% on an unadjusted basis. The refinance index spiked 6% while the purchase index remained relatively unchanged, down 0.1% week over week.
MBA chief economist Mike Fratantoni noted that December is a particularly slow time for home buying, “so it is not surprising that purchase applications did not move much in response to lower mortgage rates.”
“The Federal Reserve raised its short-term rate target last week, but longer-term rates, including mortgage rates, declined for the week, with the 30-year conforming rate reaching 6.34% – its lowest level since September,” he said. “Refinance application volume increased slightly in response but was still about 85% below year-ago levels.”
The refinance share of mortgage activity grew nearly two percentage points to 31.3% of total applications, and the adjustable-rate mortgage share decreased to 7.5%.
“The latest data on the housing market show that homebuilders are pulling back the pace of new construction in response to low levels of traffic, and we expect this weakness in demand will persist in 2023, as the US is likely to enter a recession,” Fratantoni said. “However, if mortgage rates continue to trend down, as we are forecasting, more buyers are likely to return to the market later in the year, as affordability improves with both lower rates and slower home-price growth.”
What happens to mortgage rates in the Unites States during a recession? Do they climb or drop? Will your home loan be affected? Find out in this article.
