Mortgage applications decreased 5.8% from one week earlier, although rates fell during the period to their lowest point in three months, according to the Mortgage Bankers Association.
The MBA’s Weekly Mortgage Applications Survey for the week ending Dec. 14 found that the refinance index decreased 2% from the previous week.
But even with the decline in volume, the refinance share of mortgage activity increased to 43.5% of total applications, its highest level since February 2018, from 41.5% the previous week.
The seasonally adjusted purchase index decreased 7% from one week earlier, while the unadjusted purchase index decreased 10% compared with the previous week and was 2% higher than the same week one year ago.
“Despite mortgage rates falling across the board last week to their lowest levels in three months, mortgage applications also declined, as more potential borrowers likely stayed away because of ongoing financial market volatility and economic uncertainty,” Joel Kan, the MBA’s associate vice president of economic and industry forecasting, said in a press release.
There was a larger decline in government refi apps compared with conventional loans. “With rates continuing to slide lower, refinance borrowers with larger loan balances seemed more apt to take action. The average loan balance for refinance loans increased to its highest level since September 2017,” he said.
Adjustable-rate loan activity increased to 7.9% from 7.6% of total applications, while the share of Federal Housing Administration-guaranteed loans decreased to 10.4% from 10.8% the week prior.
The share of applications for Veterans Affairs-guaranteed loans decreased to 9.9% from 10.2% and the U.S. Department of Agriculture/Rural Development share decreased to 0.6% from 0.7% the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) decreased 2 basis points to 4.94%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100), the average contract rate decreased 6 basis points to 4.8%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased 2 basis points to 4.95%. For 15-year fixed-rate mortgages, the average decreased 4 basis points to 4.37%.
The average contract interest rate for 5/1 ARMs decreased 7 basis points to 4.17%.