Mortgage applications fell 3.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending Dec. 12.
The report comes after the Federal Reserve’s interest rate cut on Dec. 10, and CNBC said the demand for home loans and refinances fell just as it did the previous two times the rate was cut.
“Mortgage rates inched up last week following the FOMC meeting, as investors interpreted the comments to signal that we are near the end of this rate cutting cycle. As a result, mortgage applications declined slightly,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “Purchase application volume typically drops off quickly at the end of the year, and this shifts the mix of the business, with the refinance share reaching 59 percent last week, the highest level since September. However, refinance activity has remained mostly the same for the past month as rates continue to hold at around the same narrow range.”
MBA said the Market Composite Index, a measure of mortgage loan application volume, decreased 3.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, MBA said the Index fell 5 percent compared with the previous week.
Refinance Index Was Down 4 Percent
The Refinance Index was 4 percent lower than the previous week and was 86 percent higher than the same week one year ago, MBA said. The seasonally adjusted Purchase Index fell 3 percent from one week earlier. MBA said the unadjusted Purchase Index decreased 7 percent compared with the previous week and was 13 percent higher than the same week one year ago.
The refinance share of mortgage activity rose to 59.0 percent of total applications from 58.2 percent the previous week, MBA said. The adjustable-rate mortgage (ARM) share of activity rose to 7.2 percent of total applications.
According to MBA, the FHA share of total applications fell to 19.5 percent from 20.2 percent the week prior. The VA share of total applications rose to 16.6 percent from 16.4 percent the week prior and the USDA share of total applications rose to 0.4 percent from 0.3 percent the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) rose to 6.38 percent from 6.33 percent, with points increasing to 0.62 from 0.60 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans, MBA said. The effective rate increased from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $806,500) fell to 6.44 percent from 6.46 percent, with points increasing to 0.41 from 0.35 (including the origination fee) for 80 percent LTV loans, MBA said. The effective rate fell from last week.
The MBA said that the average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 6.12 percent from 6.08 percent, with points increasing to 0.82 from 0.72 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
The average contract interest rate for 15-year fixed-rate mortgages increased to 5.72 percent from 5.71 percent, with points increasing to 0.74 from 0.64 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
On Monthly Basis, Applications Rose 3.1% in November
The average contract interest rate for 5/1 ARMs increased to 5.63 percent from 5.51 percent, with points decreasing to 0.35 from 0.78 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
On a monthly basis,mortgage applications for new home purchases increased 3.1 percent from a year ago, according to data in the Mortgage Bankers Association Builder Application Survey (BAS) data for November. Compared to October, applications fell by 7 percent.
“While the arrival date of official data from the Census Bureau on the pace of new home sales remains ‘TBD,’ according to the Census website, MBA’s Builder Application Survey data show that new home purchase activity was up 3 percent on an annual basis in November, and down 7 percent from the prior month,” Fratantoni said. “Mortgage rates have remained in a narrow range, and inventories of both new and existing homes on the market have increased. Potential buyers have more homes to choose from, and this removal of supply constraints is leading to a stronger sales pace.”
Fratantoni said there a couple reasons behind the numbers.
“New homebuyers continue to look for ways to extend their purchasing power or lower monthly payments, with 37 percent of new homebuyers using a mortgage choosing an FHA loan, and 24% choosing an ARM loan,” he said.
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