Despite mortgage rates continuing their two month downslide, applications decreased 9.8% from two weeks ago due to market uncertainty, according to the Mortgage Bankers Association.
The MBA's Weekly Mortgage Applications Survey for the week ending Dec. 28 found that the refinance index decreased 12%
The refinance share of mortgage activity also decreased with the overall volume, falling to 42.7% of total applications from 43.6%.
The seasonally adjusted purchase index decreased 8% from two weeks prior, while the unadjusted purchase index decreased 46% and was 6% lower than the same time in 2017.
"Mortgage applications fell over the past two weeks — even as the 30-year fixed-rate mortgage decreased to 4.84%, its lowest since September 2018. Investors continued to show a preference for safer U.S. Treasuries, as concerns over U.S. and global economic growth, along with uncertainty over the current government shutdown, drove rates lower," Joel Kan, the MBA's associate vice president of economic and industry forecasting, said in a press release.
Adjustable-rate loan activity held at 7.6% of total applications, while the share of Federal Housing Administration-guaranteed loans increased to 10% from 9.7% the week prior.
The share of applications for Veterans Affairs-guaranteed loans rose to 11% from 10.1% and the U.S. Department of Agriculture/Rural Development share decreased to 0.6% from 0.7% a week ago.
"Even with lower borrowing costs, both purchase and refinance applications decreased over the two-week holiday period, as both conventional and government applications dropped. Part of the decline in mortgage applications was possibly because of the government shutdown, as concerns over delays in FHA application processing times likely contributed to the weakness in activity," Kan said.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) decreased 2 basis points to 4.84%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100), the average contract rate jumped to 4.72% from 4.59%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased 5 basis points to 4.86%. For 15-year fixed-rate mortgages, the average decreased 6 basis points to 4.25%. The average contract interest rate for 5/1 ARMs decreased 7 basis points to 4.16%.
