Mortgage applications went down the week ending Jan. 3 from two weeks earlier, according to data from the Mortgage Bankers Association.
The MBA's Weekly Mortgage Applications Survey showed that mortgage loan application volume fell 1.5% on a seasonally adjusted basis and down 22% on an unadjusted basis. The refinance index dropped 8% from the two weeks prior but was 74% higher than the same week a year ago.
The seasonally adjusted purchase index jumped 5%. On an unadjusted basis, purchase applications plunged 14% and were 2% higher than the same week one year ago.
"Despite lower rates, refinance volume decreased these last two weeks, and we expect that it will slowly trail off in the first half of 2020 as long as mortgage rates remain in this same narrow range," said Mike Fratantoni, senior vice president and chief economist at MBA. "Homeowners would need to see a sharp drop in rates to reinvigorate the refinance wave seen in 2019."
The refinance share of mortgage activity grew from 54.8% to 58.9% of total applications. The adjustable-rate mortgage share of activity dwindled to 3.8% of total applications.
The FHA share and VA share of total applications both climbed to 12.2% and 14.1%, respectively. Meanwhile, the USDA share of total applications edged down to 0.5% from 0.6% the week before.
"The end of the year is the slowest time for home sales, so it is not at all surprising that activity was light," Fratantoni said. "However, after a seasonal adjustment, purchase application volume was up relative to the pre-holiday period and started off 2020 ahead of last year's pace. We expect that the strong job market will continue to support purchase activity this year, and the uptick in housing construction towards the end of last year should provide more inventory for prospective buyers."