Mortgage applications dropped over the last two weeks of last year even as interest rates remain at or below the 4% mark.
The Mortgage Bankers Association’s market composite index decreased 9.1% on a seasonally adjusted basis for the period ending Jan. 2. The latest data include an adjustment for New Year’s Day, while the previous week’s results were adjusted for Christmas.
Refinance activity fell 12% compared to two weeks earlier, while the purchase index was 5% lower during this time period. Additionally, the purchase index plummeted 8% from the same week a year earlier, the Washington-based trade group said.
The refinance share of mortgage loan volume rose two percentage points week over week, to 65%. Adjustable-rate mortgages accounted for 4.9% of total applications, while mortgages backed by the Federal Housing Administration consisted of 9.3% of all activity. Furthermore, Veterans Affairs applications made up 10.7% of total activity, and the USDA share held steady at 0.9%.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances below $417,000 was down three basis points, to 4.01%. Meanwhile, 30-year fixed mortgages with jumbo loan balances above $417,000 saw the average interest rate decrease six basis points, to 3.99%. The average interest rate for 30-year FHA-backed mortgages dropped one basis point, to 3.81%.
Lastly, a 15-year fixed-rate mortgage averaged 3.24% for this time period, which is down eight basis points from the week before.