Mortgage applications increased 0.9% from one week ago on a seasonally adjusted basis, according to Market Composite Index data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending December 16.
On an unadjusted basis, the index decreased 1% compared with the previous week. The Refinance Index increased 6% from the previous week and was 85% lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 0.1% from one week earlier. The unadjusted Purchase Index decreased 3% compared with the previous week and was 36% lower than the same week one year ago.
“The Federal Reserve raised its short-term rate target last week, but longer-term rates, including mortgage rates, declined for the week, with the 30-year conforming rate reaching 6.34 percent – its lowest level since September,” says Mike Fratantoni, MBA’s SVP and chief economist. “Refinance application volume increased slightly in response but was still about 85 percent below year-ago levels. This is a particularly slow time of year for homebuying, so it is not surprising that purchase applications did not move much in response to lower mortgage rates.”
“The latest data on the housing market show that homebuilders are pulling back the pace of new construction in response to low levels of traffic, and we expect this weakness in demand will persist in 2023, as the U.S. is likely to enter a recession. However, if mortgage rates continue to trend down, as we are forecasting, more buyers are likely to return to the market later in the year, as affordability improves with both lower rates and slower home-price growth.”
The refinance share of mortgage activity increased to 31.3% of total applications from 29.4% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 7.5% of total applications.
The FHA share of total applications decreased to 13.0% from 13.1% the week prior. The VA share of total applications increased to 11.9% from 11.5% the week prior. The USDA share of total applications remained unchanged at 0.6% from the week prior.
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