Refinance mortgage applications hit two-month high

Activity sees positive shift as rates continue to ease

Refinance mortgage applications hit two-month high

Refinance mortgage applications rebounded in the Mortgage Bankers Association’s latest weekly survey as the mortgage rate environment continued to improve.

Overall, home loan applications rose 2.8% on a seasonally adjusted basis for the week ending December 1. When unadjusted for the Thanksgiving holiday, mortgage applications leapt 43% week over week.

“Mortgage rates declined last week, with the 30-year fixed-rate mortgage falling to 7.17% – the lowest level since August 2023,” said Joel Kan, MBA’s deputy chief economist. “Slower inflation and financial markets anticipating the potential end of the Fed’s hiking cycle are both behind the recent decline in rates.”

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The refinance index, in particular, experienced a notable upswing, soaring 14% from the previous week and standing 10% higher than the same period last year.

“Refinance applications saw the strongest week in two months and increased on a year-over-year basis for the second consecutive week for the first time since late 2021,” Kan said. “The overall level of refinance applications is still very low, but recent increases could signal that 2023 was the low point in this cycle for refinance activity, consistent with our originations forecast.”

Meanwhile, the seasonally adjusted purchase index saw a slight dip of 0.3%, though its unadjusted version rose by 35% week over week but still trailed by 17% compared to the same week last year.

“Purchase applications remained 17% lower than a year ago, held back by low inventory and still-challenging affordability conditions,” Kan added.

The share of refinance activity in total mortgage applications climbed to 34.7% from 30.6% the previous week, while the share of adjustable-rate mortgages (ARM) dipped to 7.4% of total applications.

The report further highlighted changes in government loan applications. The FHA share of total applications increased to 15% from 13.5% the week before. The VA share also edged up to 12.8% from 12.6%, and the USDA share remained unchanged at 0.5%.

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