Mortgage applications have seen a substantial increase of 7.4% this week, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. This uptick, ending the week of December 8, 2023, signifies a shift in the housing market dynamics.
The Market Composite Index, a key barometer for mortgage loan application volume, echoed this trend with a 7.4% rise on a seasonally adjusted basis. When not adjusted for seasonality, the index showed a 6% increase compared to the previous week. The Refinance Index increased 19% from the previous week and was 27% higher than the same week one year ago. Meanwhile, the Purchase Index increased 4% from one week earlier. The unadjusted Purchase Index decreased 1% compared with the previous week and was 18% lower than the same week one year ago.
The refinance share of mortgage activity increased to 39.2% of total applications from 34.7% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.3% of total applications.
“Mortgage rates dropped last week, as incoming data point to a slowing economy and support a pivot by the Federal Reserve to begin cutting rates next year. The average 30-year fixed mortgage rate declined to 7.07%, the lowest level since July,” said Mike Fratantoni, MBA’s SVP and chief economist. “Borrowers who had seen rates near 8% earlier this fall are now seeing some lenders quote rates below 7%. Refinance volume picked up in response to this drop in rates, with a particularly notable increase for FHA and VA refinance applications. Purchase volume was running about 18% below last year’s pace, as prospective homebuyers are still challenged by a lack of inventory, even as rates have decreased.”
There was a rise in the FHA share of total applications to 16.1%, up from 15%, and the VA share increased to 14.2% from 12.8%. The USDA share, however, saw a slight decline.
In terms of interest rates, the average contract rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased to 7.07%, while the jumbo loan balances rate dropped to 7.22%. The 30-year fixed-rate mortgages backed by the FHA saw a decrease to 6.84%. Moreover, the 15-year fixed-rate mortgages declined to 6.67%, and the 5/1 ARMs, to 6.47%.
