Mortgage loan application volume rose 2% last week, the Mortgage Bankers Association’s (MBA) weekly survey reported.
The seasonally adjusted Market Composite Index, a measure of mortgage loan application volume, rose 2%. The seasonally adjusted purchase index fell 5%, while the unadjusted purchase index rose 28% and was 8% lower YOY.
The share of refinance applications rose 9% and was down 37% YOY. Refinances made up 53.9% of total applications, up from 59.4% the previous week.
The report noted that mortgage rates fell after rising for several weeks, which resulted in the surge of refinances.
“While the 30-year fixed mortgage rate and 15-year fixed mortgage rate both declined only one basis point, the FHA rate fell 7 basis points, driving the surge in government refinances. Borrowers are continuing to act on these opportunities, but if rates trend higher as MBA is forecasting, the window of opportunity to refinance will continue to get smaller,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.
“The purchase market was slower last week, with applications falling after four consecutive increases. Activity is still close to the highest level since March 2021, which is a positive sign as the year comes to an end. Purchase activity continues to be constrained by a lack of inventory, combined with rapid rates of home-price appreciation and mortgage rates higher than in 2020.”
The average American homebuyer would have to use 22.4% of their income to purchase an average-priced home with a 30-year mortgage, the largest share of income required for a home purchase since 2018 when interest rates were close to 5%.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances fell from 3.31% to 3.30%. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances rose to 3.33% from 3.27%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA fell from 3.42% to 3.35%