[CORRECTION: The story has been updated to reflect that the MBA projects $3.39 trillion instead of $3.9 trillion]
Mortgage applications decreased 0.3% last week, following a 0.5% drop from the beginning of November, according to a report from the Mortgage Bankers Association.
The refinance index dropped 2%, while the unadjusted purchase index fell 1% from the previous week. The seasonally adjusted purchase index climbed 3%. The refinance and purchase indexes still dwarf last year’s totals from the same week, though – 98% and 26% year-over-year, respectively.
Joel Kan, MBA’s associate vice president of economic and industry forecasting, said the refinance index decrease can be attributed to “sharp declines” in FHA and VA applications – from 10.6 to 10.5 and from 12.6 to 12.1, respectively.
“Housing demand remains supported by the ongoing recovery in the job market, and an increased appetite from households seeking more space because of the pandemic,” he said. “The average refinance loan balance of $291,000 last week was the lowest since January, and many borrowers with higher loan balances may have acted earlier on in the current refinance wave.”
Kan noted the increase in purchase activity – meaning it has climbed above year-ago levels for the 26th-straight week. Total mortgage originations are expected to be at $3.39 trillion in 2020.
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Here is a more detailed breakdown of this week’s mortgage application data:
- The USDA share of total mortgage applications increased to 0.5% from 0.4%
- The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) increased to 2.99% from 2.98%
- The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) fell to 3.11% from 3.13%
- The average contract interest rate for 30-year fixed-rate mortgages increased to 3.11% from 3.08%
- The average contract interest rate for 15-year fixed-rate mortgages increased to 2.59% from 2.55%
- The average contract interest rate for 5/1 ARMs increased to 53% from 2.84%