In keeping with seasonal cycles, mortgage application volume fell 5.8% on an adjusted basis during the week ended Dec. 14, according to the Mortgage Bankers Association’s (MBA) Weekly Applications Survey.
Applications for refinances fell 2% while applications for purchases plummeted 7% compared with the previous week.
On an unadjusted basis, total volume fell 7%. Applications for purchases decreased 10% compared with the previous week but were 2% higher compared with the same week one year earlier.
The drop comes despite the fact that mortgage rates continued to decrease for a second consecutive week. The average rate for a 30-year fixed-rate mortgage was 4.94%, down from 4.96% the previous week.
“Despite mortgage rates falling across the board last week to their lowest levels in three months, mortgage applications also declined, as more potential borrowers likely stayed away because of ongoing financial market volatility and economic uncertainty,” says Joel Kan, associate vice president of economic and industry forecasting for the MBA, in a statement. “Purchase applications decreased almost seven percent over the week and refinances decreased around two percent, led by a larger decline in government refinances compared to conventional refinances.
“With rates continuing to slide lower, refinance borrowers with larger loan balances seemed more apt to take action,” Kan adds. “The average loan balance for refinance loans increased to its highest level since September 2017.”
The refinance share of mortgage activity increased to 43.5% of total applications, up from 41.5% the previous week to reach the highest level since February.
The adjustable-rate mortgage (ARM) share of activity increased to 7.9% of total applications.
The average contract interest rate for 5/1 ARM was 4.17%, down from 4.24% to reach the lowest level since September.