Mortgage Application Volume hits 12-year Low

It was another down week for mortgage application activity.  The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of application volume, fell 5.5 percent on a seasonally adjusted basis during the week ended December 13 and was down 6 percent on a non-adjusted basis compared to the week ended December 6.

"Mortgage applications fell further last week, with the market index falling to its lowest level in more than a dozen years," said Mike Fratantoni, MBA's Vice President of Research and Economics.  "Both purchase and refinance applications fell as interest rates increased going into today's Federal Open Market Committee meeting."

The MBA's Refinance Index was down 4 percent from the previous week but refinancing's share of all activity increased from 65 percent to 66 percent.  The seasonally adjusted Purchase Index dropped 6 percent to its lowest level since December 2012.  The unadjusted Purchase Index decreased 9 percent compared with the previous week and was 12 percent lower than the same week one year ago.

Refinance Index vs 30 Yr Fixed

Purchase Index vs 30 Yr Fixed

Mortgage rates were mixed.  The 30-year fixed-rate mortgage (FRM) with conforming balances of $417,000 or less had an average contract rate of 4.62 percent, the highest since September, with 0.38 point.  The previous week the rate was 4.61 percent with 0.26 point.  The effective rate also increased.

The jumbo 30-year FRM (balances over $417,000) had an average contract rate of 4.61 percent, an increase of 2 basis points from the previous week, and points increased from 0.15 to 0.24.  This was also the highest contract rate since September and the effective rate increased as well.

Both the contract and effective rates for 30-year FRM backed by the FHA were down from the previous week with the contract rate at 4.25 percent compared to 4.30 percent.  Points decreased to 0.32 from 0.38.

Average rates for 15-year FRM were unchanged at 3.66 percent.  Points increased to 0.35 from 0.31 and the effective rate rose. .  

The share of adjustable rate mortgages remained unchanged at 8 percent of total applications.  Both the average contract rate and effective rate of the 5/1 ARM increased with the contract rate rising 9 basis points to 3.20 percent and points up to 0.42 from 0.35.

Application volume and rate information are compiled by MBA from its Weekly Mortgage Application Survey which has been conducted since 1990.  Rates are quoted for loans with an 80 percent loan-to-value ratio and points include the origination fee.  Base period and value for indexes is March 16, 1990=100.