With mortgage rates hitting six-week lows this past week, home-purchase applications saw their fifth-straight week of increases, driven primarily by a surge in refinance activity by borrowers with the higher rates of this time last year. Veterans Affairs loans in particular saw the highest refi activity with an 85% increase over the previous week.
Let’s look at the numbers. According to this week’s Weekly Mortgage Applications Survey from the Mortgage Bankers Association (MBA) for the week ending Dec. 6, home-purchase applications increased 5.4% from last week’s 2.8% increase. MBA noted last week’s results included an adjustment for the Thanksgiving holiday.
“Mortgage rates decreased again for the third consecutive week, with the 30-year fixed rate dipping to 6.67%,” said Joel Kan, MBA’s vice president and deputy chief economist. “Applications increased 5%, driven by a 27-percent surge in refinance activity, as borrowers with higher rates acted on the chance to lower their payments. VA refinance applications were up 85% from the previous week, matching some of the larger swings in VA activity reported in recent months.”
According to this week’s data, the Market Composite Index, a measure of mortgage loan application volume, increased 5.4% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 50% compared with the previous week. The Refinance Index increased 27% from the previous week and was 42% higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 4% from one week earlier. The unadjusted Purchase Index increased 30% compared with the previous week and was 4% higher than the same week one year ago.
“Purchase applications remained relatively strong and have shown annual gains in all but one week over the past three months,” added Kan. “In addition to lower rates, purchase activity continues to be supported by sustained housing demand and inventory that continues to grow gradually in many markets.”
The data on the refi surge: MBA report that the refinance share of mortgage activity increased to 46.8% of total applications from 38.7% the previous week.
To read the full report, click here.
