Mortgage applications increase as rates slip to another record low

Mortgage applications increased 1.1% from one week earlier as a decline in rates to yet another low point brought consumers into the market, according to the Mortgage Bankers Association.

The MBA’s Weekly Mortgage Applications Survey for the week ending Dec. 11 found that the refinance index increased 1% from the previous week and was 105% higher than the same week one year ago. The refinance share of mortgage activity increased to 72.7% of total applications from 72% the previous week.

“U.S. Treasury rates stayed low last week, in part due to uncertainty over the prospects of additional pandemic-related government stimulus, as well as concerns about the continued rise in COVID-19 cases across the country,” Joel Kan, the MBA’s associate vice president of economic and industry forecasting, said in a press release. “Mortgage rates as a result fell to another survey low, with the 30-year fixed mortgage rate dropping 5 basis points to 2.85%."

The seasonally adjusted purchase index increased 2% from one week earlier. On an unadjusted basis the purchase index decreased 2% compared with the previous week. However, it was 26% higher than the same week one year ago.

“The ongoing strength in the housing market has carried into December. Applications to buy a home increased for the fourth time in five weeks, as both conventional and government segments of the market saw gains. Government purchase applications rose for the sixth straight week to the highest level since June — perhaps a sign that more first-time buyers are entering the market,” Kan added.

Adjustable-rate mortgage activity increased to 1.8% from 1.7% of total applications, while the share of Federal Housing Administration-insured loan applications increased to 11% from 9.9% the week prior.

Veterans Affairs-guaranteed loans saw their share decrease to 12.1% from 12.7% and the U.S. Department of Agriculture/Rural Development share remained unchanged from 0.4% the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased 5 basis points to 2.85%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400), the average contract rate decreased 8 basis points to 3.12%.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to a basis point 2.96%. For 15-year fixed-rate mortgages, the average decreased 2 basis points 2.49%. The average contract interest rate for 5/1 ARMs decreased 2 basis points to 2.58%.