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.
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.”