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The Mortgage Bankers Association's Weekly Mortgage Application Survey reported a 1.2% decline in mortgage applications for the week ending Dec. 4, 2020. Refinance applications bounced back for a rare 2020 decrease, with the Refinance Index increasing by 2%.
Refinances are still up 89% year-over-year, continuing to power the majority of mortgage transactions. Meanwhile, the seasonally adjusted Purchase Index decreased by 5% and saw a 29% increased on an unadjusted basis. The Purchase Index was 22% higher year-over-year.
"Refinance activity increased last week in response to mortgage rates for 30-year, 15-year, and FHA loans hitting their lowest levels in MBA's survey. The increase in refinance applications was driven by FHA and VA refinances, while conventional activity fell slightly. The ongoing refinance wave has continued through the fall, with activity last week up 89 percent from a year ago," said Joel Kan, MBA's associate vice president of Economic and Industry Forecasting. "The purchase market is also poised to finish 2020 on a strong note. Applications fell slightly last week but were around 3 percent higher than the two weeks leading up to Thanksgiving. Reversing the recent trend, there was also a shift in the composition of purchase applications, with an increase in government loans pushing the average loan balance lower."
According to the MBA, the refinance share of mortgage activity increased to 72% of total applications from 69.5% the previous week. The adjustable-rate mortgage share of activity decreased to 1.7% of total applications, the FHA share increased to 9.9% from 9.1%, the VA share increased to 12.7% from 11.9% the previous week and the USDA share of total applications remained stagnant at 0.4%.