Mortgage application activity decreased 1.2% on a seasonally adjusted basis last week, but refinance volume picked up as interest rates reached a new survey low, according to the Mortgage Bankers Association.
The MBA’s Weekly Mortgage Applications Survey for the week ending Dec. 4 found that the refinance index increased 2%
On an unadjusted basis, application volume increased by 40% from the previous week as interest rates hit new lows for 30-year conforming, 15-year and Federal Housing Administration-insured mortgages.
“The increase in refinance applications was driven by FHA and Veterans Affairs refinances, while conventional activity fell slightly,” Joel Kan, the MBA’s associate vice president of economic and industry forecasting, said in a press release. “The ongoing refinance wave has continued through the fall, with activity last week up 89% from a year ago.”
The seasonally adjusted purchase index decreased 5% from one week earlier, while the unadjusted purchase index increased 29% compared with the previous week and was 22% higher than the same week one year ago.
“The purchase market is also poised to finish 2020 on a strong note,” Kan said. “Applications fell slightly last week but were around 3% higher than the two weeks leading up to Thanksgiving. Reversing the recent trend, there was also a shift in the composition of purchase applications, with an increase in government loans pushing the average loan balance lower.”
Adjustable-rate mortgage activity decreased to 1.7% from 1.8% of total applications, while the share of Federal Housing Administration-insured loan applications increased to 9.9% from 9.1% the week prior.
Veterans Affairs-guaranteed loans saw their share increase to 12.7% from 11.9% 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 2 basis points 2.9%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400), the average contract rate increased 1 basis point to 3.2%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased 3 basis points to 2.97%. For 15-year fixed-rate mortgages, the average decreased 2 basis points to 2.51%. The average contract interest rate for 5/1 ARMs decreased 3 basis points to 2.6%.
