Mortgage Applications Return to Pre-Holiday Levels

Mortgage application activity was essentially flat on a seasonally adjusted basis during the week ended December 2 while swinging broadly on a non-seasonally adjusted basis as business recovered from the previous week and the Thanksgiving holiday.  The Mortgage Bankers Association's Market Composite Index, a measure of application volume, decreased 0.7 percent adjusted and was up 39 percent unadjusted.  During the week ended November 25 the unadjusted index had fallen by 38 percent (no doubt holiday-related).

The Refinance Index was down 1 percent from the previous week, but the share of applications that were for refinancing ticked up to 56.2 percent from 55.1 percent.

The seasonally adjusted Purchase Index improved by 0.4 percent from the prior week while unadjusted it jumped 36 percent after falling by 34 percent the week before.  Volume was 3 percent higher than during the same week in 2015.  

Applications for FHA mortgages made up 11.3 percent of the total compared to 10.4 percent a week earlier and the VA share rose to 12.6 percent from 11.7 percent.  USDA loan applications were up one percentage point to 9 percent.

Interest rates continued to trend upward as they have since early November with only FHA-backed loans failing to follow suit.  All other products saw both their contract and effective rates rise.

The average contract interest rate for 30-year fixed-rate mortgages (FRM) with conforming loan balances ($417,000 or less) increased to 4.27 percent, the highest level for the product since October 2014.  Points decreased to 0.37. The previous week the rate was 4.23 percent with 0.41 point.

Jumbo 30-year FRMS (loans with balances over $417,000) had an average rate of 4.22 percent, the highest level since September 2014, up from 4.18 percent. Points were unchanged at 0.29.

The average rate for 30-year FRMs backed by the FHA was unchanged at the highest point since July 2015, 4.00 percent.  Points eased back to 0.38 from 0.44 pulling the effective rate down from the previous week.  

Fifteen-year FRMS increased to the highest level since September 2014, 3.53 percent, from 3.48 percent. Points rose to 0.39 from 0.33.

The adjustable-rate mortgage (ARM) share of total applications increased to 6.0 from 5.7 percent.  It was the largest share for ARMs since February 2016 when rates were also on the rise. The average contract rate for 5/1 ARMs were the highest since September 2013, 3.39 percent, up from 3.23 percent.  Points fell to 0.28 from 0.44.

MBA's Weekly Mortgage Applications Survey has been conducted since 1990.  It covers over 75 percent of all U.S. retail residential mortgage applications with respondents that include mortgage bankers, commercial banks and thrifts.  Base period and value for all indexes is March 16, 1990=100 and interest rate information presumes loans with an 80 percent loan-to-value ratio and points that include the origination fee.