Volume declines but is still close to the highest level since March
A drop in interest rates drove a surge in mortgage applications for the week ending December 03, according to the results of the Mortgage Bankers Association’s weekly survey.
MBA’s Market Composite Index posted a 2% seasonally adjusted increase. Unadjusted, the index was 45% higher than the previous week. Refinance loan application volume jumped 9% week over week but was 37% lower than a year ago. Purchase activity fell 5% on a seasonally adjusted basis, but was up by 28% on an unadjusted basis.
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“The purchase market was slower last week, with applications falling after four consecutive increases,” said Joel Kan, AVP of economic and industry forecasting at MBA. “Activity is still close to the highest level since March 2021, which is a positive sign as the year comes to an end. Purchase activity continues to be constrained by a lack of inventory, combined with rapid rates of home-price appreciation and mortgage rates higher than in 2020.”
There was a 4.5% increase in the refi share of mortgage activity, up to 63.9% from the week before. Meanwhile, the adjustable-rate mortgage (ARM) share of activity decreased to 3% of total applications.
“While the 30-year fixed mortgage rate and 15-year fixed mortgage rate both declined only one basis point, the FHA rate fell seven basis points, driving the surge in government refinances,” Kan said. “Borrowers are continuing to act on these opportunities, but if rates trend higher as MBA is forecasting, the window of opportunity to refinance will continue to get smaller.”
