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Mortgage Applications Increase as 2020 Draws to a Close

Mortgage application volume increased 0.8% on an adjusted basis during the week ended Dec. 18, as mortgage rates remained flat at historic lows, according to the Mortgage Bankers Association’s (MBA) Weekly Applications Survey.

Applications for refinances increased 4% compared with the previous week while applications for purchases decreased 5%.

The dip in applications for purchases was in keeping with seasonal cycles.

Year-over-year, applications for refinances were up 124%, while applications for purchases were up 26%. 

On an unadjusted basis, total volume increased 1% compared with the previous week.

“Mortgage rates are closing the year at record lows,” says Joel Kan, associate vice president of economic and industry forecasting for the MBA, in a statement. “The 30-year fixed rate – at 2.86 percent – is a full percentage point below a year ago.

“Last week’s increase in refinance applications was driven by FHA and VA activity, while conventional refinances saw a slight decline,” Kan says. “Overall refinance activity was 124 percent higher than in 2019, as borrowers continue to seek lower monthly payments or different loan terms. Purchase applications decreased for the second time in three weeks, as both conventional and government applications saw a drop-off. Despite the decline, purchase applications remained 26 percent higher than the same week a year ago, and the average loan balance reached another record high.

“There are still signs of relative strength in the housing market as 2020 ends,” Kan adds. “However, housing affordability will be worth monitoring next year. The lower loan size segment of the market – particularly for entry-level and first-time buyers – continues to be impacted by rapidly increasing home prices and tight inventory.”

The refinance share of mortgage activity increased to 74.8% of total applications, up from 72.7% the previous week.

The adjustable-rate mortgage (ARM) share of activity increased to 1.9% of total applications.

The average rate for a 30-year fixed-rate mortgage was 2.86%, up from 2.85% the previous week.

The post Mortgage Applications Increase as 2020 Draws to a Close appeared first on MortgageOrb.



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