Real Estate

Mortgage Applications Increase For Fourth Time In 5 Weeks

Mortgage applications and refinance applications increased during the week ending Dec. 11, 2020, according to the Mortgage Bankers Association’s weekly survey.

Mortgage applications increased 1.1 percent week over week during the week ending Dec. 11, 2020, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey.

On a seasonally adjusted basis, the market composite index, which measures the volume of mortgage loan applications, increased 1.1 percent from the previous week. On an unadjusted basis, the index increased 0.4 percent from the week prior.

The refinance index increased 1 percent week over week and 105 percent year over year.

Meanwhile, the purchase index increased 2 percent week over week on a seasonally adjusted basis. The unadjusted purchase index, however, decreased 2 percent from the week before, but was still up 26 percent year over year.

Joel Kan, MBA’s associate vice president of economic and industry forecasting, explained in a press release how falling mortgage rates continued to positively impact mortgage applications during the week’s survey.

Joel Kan

“U.S. Treasury rates stayed low last week, in part due to uncertainty over the prospects of additional pandemic-related government stimulus, as well as concerns about the continued rise in COVID-19 cases across the country,” Kan said. “Mortgage rates as a result fell to another survey low, with the 30-year fixed mortgage rate dropping five basis points to 2.85 percent. Homeowners once again acted on the decline in rates, with refinance activity rising for the second straight week and up 105 percent from a year ago.”

Despite transitioning further towards winter, traditionally a time for slowed homebuying, buyers stayed active in the market, driving an increase in applications, and a new high in government purchase applications.

“The ongoing strength in the housing market has carried into December,” Kan said in a statement. “Applications to buy a home increased for the fourth time in five weeks, as both conventional and government segments of the market saw gains. Government purchase applications rose for the sixth straight week to the highest level since June — perhaps a sign that more first-time buyers are entering the market.”

The share of refinance applications also increased slightly, from 72.0 percent the week prior to 72.7 percent.

While the Federal Housing Administration (FHA) share of total applications rose from 9.9 percent the previous week to 11.0 percent, Veterans Affairs (VA) applications decreased slightly from 12.7 percent the week before to 12.1 percent. U.S. Department of Agriculture (USDA) applications stayed the same at 0.4 percent.

On 30-year fixed-rate mortgages with conforming loan balances, the average contract interest rate hit a survey low of 2.85 percent, down from 2.90 percent the previous week. Points also decreased to 0.33 from 0.35 for 80 percent loan-to-value ratio (LTV) loans.

For 30-year fixed-rate mortgages with jumbo loan balances (those over $510,400) also declined week over week, from 3.20 percent to 3.12 percent. Points increased to 0.33 from 0.28 (including the origination fee) for 80 percent LTV loans.

FHA-backed 30-year fixed-rate mortgages also saw a decline in the average contract interest rate from 2.97 percent the previous week to a new survey low of 2.96 percent. Points increased from 0.40 to 0.42 for 80 percent LTV loans.

On 15-year fixed-rate mortgages the average contract interest rate also hit a survey low of 2.49 percent, down from 2.51 percent the previous week. Points declined from 0.35 to 0.29 for 80 percent LTV loans.

Email Lillian Dickerson

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