Application Volume Down as Rates Hit Two-Year High

Mortgage

Mortgage application volume decreased 0.7% from one week earlier, as conforming and jumbo interest rates reached their highest level in over two years, according to the Mortgage Bankers Association.

The one bright spot in the MBA’s Weekly Mortgage Applications Survey for the week ending Dec. 2 was that the seasonally adjusted purchase index increased 0.4%. On an unadjusted basis, the purchase index increased 36% compared with the previous week and was 3% higher than the same week one year ago. The prior week’s results included an adjustment for the Thanksgiving holiday.

However, the higher rates took their toll on refinance applications, which decreased 1% from the previous week.

The market share of refi applications increased to 56.2% from 55.1% the previous week.

The adjustable-rate mortgage share of activity increased to 6% of total applications, the highest level since February 2016, while the Federal Housing Administration share increased to 11.3% from 10.4%.

The VA share increased to 12.6% from 11.7% and the USDA share increased 1 basis point to 0.9%.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to its highest level since October 2014, 4.27%, from 4.23%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000), the average contract rate increased to its highest level since September 2014, 4.22%, from 4.18%.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA remained unchanged at 4%, while for 15-year fixed-rate mortgages backed by the FHA, the average increased 5 basis points 3.53%.

The average contract interest rate for 5/1 ARMs increased to its highest level since September 2013, 3.39%, from 3.23%.

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