Mortgage applications experienced a marginal decline of 1.5% during the week ending December 15, 2023, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey.
The MBA's Market Composite Index, which measures mortgage loan application volume, reflected this 1.5% decrease on a seasonally adjusted basis compared to the previous week. On an unadjusted basis, the Index showed a more pronounced decline, dipping by 3% compared to the preceding week.
The Refinance Index, which gauges applications for mortgage refinancing, reported a 2% decrease from the previous week but remained 18% higher than the same week in the previous year. Meanwhile, the seasonally adjusted Purchase Index, reflecting applications for new home purchases, experienced a 1% decrease compared to the previous week, while the unadjusted Purchase Index dropped by 4% and was down by 18% from the corresponding week in the previous year.
"With the positive news about the drop in inflation, and the FOMC projections proclaiming a pivot towards rate cuts, the 30-year fixed mortgage rate reached its lowest level since June 2023, declining to 6.83%,” said Mike Fratantoni, MBA’s SVP and chief economist. "At least as of last week, borrowers' response to this rate move was rather tepid. VA refinance applications jumped 18% for the week, but otherwise, both refinance and purchase applications showed small declines."
In terms of the share of mortgage activity, the refinance segment increased slightly to 39.7% of total applications, compared to 39.2% in the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 6.3% of total applications.
The data also revealed changes in the share of government-backed loans, with the FHA share of total applications decreasing to 15.5% from 16.1% the previous week, while the VA share of total applications increased to 15.6% from 14.2% the week prior. The USDA share of total applications remained steady at 0.4%.
Regarding interest rates, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances (up to $726,200) saw a decline to 6.83% from 7.07%. The points increased slightly to 0.60 from 0.59, including the origination fee, for 80 percent loan-to-value ratio (LTV) loans.
For 30-year fixed-rate mortgages with jumbo loan balances (exceeding $726,200), the average contract interest rate decreased to 7.12% from 7.22%, while the points increased to 0.55 from 0.37 for 80% LTV loans.
For 30-year fixed-rate mortgages backed by the FHA, the average contract interest rate decreased to 6.65% from 6.84%, with points decreasing to 0.69 from 0.72 for 80% LTV loans.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 6.41% from 6.67%, with points increasing to 0.77 from 0.58 for 80% LTV loans.
Finally, for 5/1 adjustable-rate mortgages (ARMs), the average contract interest rate decreased to 6.33% from 6.47%, while points decreased to 0.57 from 0.76 for 80% LTV loans.
