Mortgage applications increased 2% for the week ending Dec. 3, driven by a surge in government refinancings according to the Mortgage Bankers Association (MBA) survey published on Wednesday.
The increase was mainly driven by the refinance index up 9% from the previous week on a seasonally adjusted basis. Concurrently, the purchase index decreased 5% from the week prior.
“Mortgage rates declined for the first time in a month, prompting a pickup in refinancing, with government refinances increasing more than 20% over the week,” Joel Kan, the MBA’s associate vice president of economic and industry forecasting, said in a statement.
The trade group estimates the average contract 30-year fixed-rate mortgage for conforming loans ($548,250 or less) decreased to 3.30%, one basis point down from the previous week. For jumbo mortgage loans (greater than $548,250), rates rose to 3.33% from 3.27% the week prior. Meanwhile, the rate for mortgages backed by the Federal Housing Administration (FHA) fell to 3.35% from 3.42%.
“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,” Kan said.
Regarding the purchase market, Kan said mortgage applications fell after four consecutive increases, but activity is still close to the highest level since March, a positive sign. “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.”
Compared to a year ago, mortgage applications declined across the board. The overall market composite index dipped 27.3% on a seasonally adjusted basis. Refinance apps fell 36.5% year over year, and purchase apps decreased 9.4% in the same period.
Refinances represented 63.9% of total mortgage applications, down from 59.4% the previous week. VA loans comprised 10.7%, increasing seven basis points. Meanwhile, FHA loans went from 8.9% to 9.9% in the period. The USDA share was at 0.5% of the total.
Source: housingwire.com