In what may be a sign of growing confidence in the real estate market, applications for mortgages were up 5.4% for the week ended December 6, 2024 compared to the prior week as mortgage rates fell, according to the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey.
This reading was on a seasonally adjusted basis. Unadjusted, the MBA’s Market Composite Index (MCI), which measures the volume of all types of loan applications, rose 50% in the same period.
“Purchase applications remained relatively strong and have shown annual gains in all but one week over the past three months,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “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.”
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Refinancing accounted for 46.8% of total applications compared to just 38.7% the previous week. “Applications increased 5 percent, driven by a 27-percent surge in refinance activity, as borrowers with higher rates acted on the chance to lower their payments,” Kan noted. The Refinance Index, which covers all applications to refinance an existing mortgage, rose 27% above the prior week and 42% above its year-ago level.
The exception was the seasonally adjusted Purchase Index, which covers all types of loan applications for single-family homes, fell 4% compared to the week before. The unadjusted Purchase Index rose 30% compared to the previous week and 4% compared to the year before.
Applications for VA financing soared 85% over the previous week. The FHA share of total applications rose 0.5% to 16.5% while the USDA share remained unchanged at 0.4%. Adjustable-rate mortgages fell to 5.3% as a share of all applications.
Mortgage rates fell for the third week in a row, with the 30-year fixed rate slipping to 6.67% from 6.69% for 30-year fixed-rate mortgages with loans of $766,550 or less. Points fell from 0.67 to 0.66 for 80% loan-to-value (LTV) ratios. Interest on 30-year fixed-rate mortgages on jumbo loans with larger balances dropped form 6.85% to 6.79%. The rate for 30-year FHA-backed loans dipped from 6.49% to 6.47%.
There was no change in the interest rate for 15-year fixed-rate mortgage loans, though points rose to 0.66 from 0.52.
The average contract interest rate for 5/1 ARMs, adjustable-rate mortgages for five-year periods that adjust once a year, dipped from 6.24% to 5.81%. Points on these mortgages fell to 0.40 from 0.58, including the origination fee, for 80% LTV loans.
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