Loan applications saw their
The MBA's Market Composite Index, which tracks loan-application activity based on surveys of the association's members, climbed up by a seasonally adjusted 2.8% for the seven-day period ending Dec. 1. Despite the recent sustained upswing, last week's activity remained 11.3% below levels from one year ago.
Activity picked up as mortgage rates continued their recent descent. The average contract rate of the 30-year fixed-rate mortgages
Lower rates helped bring about a 13.9% week-over-week acceleration in the Refinance Index. Refinances also accounted for a 34.7% share relative to total activity, rising from 30.6%.
"Refinance applications saw the strongest week in two months and increased on a year-over-year basis for the second consecutive week for the first time since late 2021," said Joel Kan, MBA vice president and deputy chief economist, in a press release. Compared to the same seven days of 2022, refinance activity was 9.5% higher.
"The overall level of refinance applications is still very low, but recent increases could signal that 2023 was the low point in this cycle for refinance activity, consistent with our originations forecast," Kan added.
The leap in refinances offset a flat week for purchase applications. The seasonally adjusted Purchase Index edged down 0.3%, and compared to the same survey period a year ago, activity came in 17.6% lower, with limited inventory and affordability putting a damper on home buying.
Purchase numbers inched down for the week due to falling conventional activity, as government-backed home buying volumes, particularly from the Federal Housing Administration, grew rapidly. The seasonally adjusted Government Index increased 10% from the previous week, with both refinances and purchases rising.
The elevated interest in federally backed home loans, which are commonly used to finance more affordable starter properties, managed to drive average application amounts down to notable lows, at least for one week. The mean purchase-applications size crossed under $400,000 for the first time since early January, with a 3.6% drop to $396,500 from $411,100 seven days earlier. Meanwhile, refinance amounts grew by only a fraction to $251,900 from $251,800. With the significant fall in purchase sizes, the overall average fell to its lowest 2023 mark of $345,900, declining 4.5% from $362,300 week over week.
Despite the one-week pullback in purchase amounts, home buying is expected to remain challenging in 2024, even as housing economists at Realtor.com and Redfin predict
Corresponding to last week's rush of federally backed activity, the share of FHA-sponsored applications expanded to 15% of volume compared to 13.5% one week prior. Loans insured by the Department of Veterans Affairs garnered 12.8% of activity, increasing from 12.6%, while the portion of loans backed by the U.S. Department of Agriculture remained at 0.5%.
Interest rates among MBA lenders fell across all loan types reported, with the average contract rate for 30-year jumbo mortgages dropping to 7.35% from 7.54% in the previous survey. Borrower points decreased to 0.44 compared to 0.62 for 80% LTV-ratio loans.
The average rate of 30-year FHA-backed loans took a similar sized fall to finish at 6.98% compared to 7.18% the prior week. Points rose to 0.84 from 0.81.
The contract 15-year fixed-rate mortgage continued declining to 6.8% from 6.88% week over week. Borrowers typically used 0.77 points, a 25 basis point upturn from 0.52 one week earlier.
The contract rate of the 5/1 adjustable-rate mortgage, which begins fixed for a 60-month term, inched back by a single basis point to 6.58% from 6.59%. Points declined to 0.69 from 0.76. As fixed averages have receded, borrower interest in taking out adjustable-rate mortgages has similarly fallen, with their share shrinking to 7.4% last week relative to overall application volumes. In the previous survey, ARM share had come in at 8.1%
