Mortgage application volume increased 1.6% on an adjusted basis for the week ended December 7, according to the Mortgage Bankers Association (MBA).
Applications for refinances increased 2% from the previous week while applications for purchases increased 3%, according to the MBA’s Weekly Applications Survey, which covers about 75% of the mortgage market.
The increase coincides with a drop in mortgage rates. The average rate for a 30-year fixed-rate mortgage, based on closings, was 4.96%, down from 5.08%.
Even the average rate for a 5/1 adjustable-rate mortgage – which had been on the rise for the past several weeks – dropped. It fell to an average of 4.24%, down from 4.33%.
On an unadjusted basis, total application volume decreased 1% compared with the previous week. Applications for purchases fell 2% on an unadjusted basis but were 4% higher compared with the same week one year earlier.
“Mortgage rates fell across the board last week, driven by a similar slide in Treasuries,” says Joel Kan, associate vice president of economic and industry forecasting for the MBA, in a release. “Trade fears dominated investors’ concerns, and this was amplified by data released by the U.S. Commerce Department showing a widening trade deficit. The 30-year fixed mortgage rate decreased 12 basis points over the week back below five percent, representing the largest single week drop since 2017.
“As a result of these recent rate declines, we saw another weekly increase in refinance applications, along with a rise in the average refinance loan size,” Kan says. “Larger loans tend to react more readily for a given change in mortgage rates. Meanwhile, purchase application activity also increased over the week and was up more than three percent compared to a year ago.”
The refinance share of mortgage activity increased to 41.5% of total applications, up from 40.4% the previous week.
The ARM share of activity increased to 7.6% of total applications.