Mortgage application volume jumped 7.4% during the week ended December 8, as the average rate for a 30-year fixed-rate mortgage fell to 7.07%, down from 7.17% the previous week, according to the Mortgage Bankers Association’s (MBA) Weekly Applications Survey.
Applications for refinances increased 19% from the previous week and were up 27% compared with the same week one year ago.
Applications for purchases increased 4% from the previous week but were down 18% compared with the same week one year ago.
“Mortgage rates dropped last week, as incoming data point to a slowing economy and support a pivot by the Federal Reserve to begin cutting rates next year,” says Mike Fratantoni, senior vice president and chief economist for the MBA, in a statement. “The average 30-year fixed mortgage rate declined to 7.07 percent, the lowest level since July.
“Borrowers who had seen rates near 8 percent earlier this fall are now seeing some lenders quote rates below 7 percent,” Fratantoni adds. “Refinance volume picked up in response to this drop in rates, with a particularly notable increase for FHA and VA refinance applications. Purchase volume was running about 18 percent below last year’s pace, as prospective homebuyers are still challenged by a lack of inventory, even as rates have decreased.”
The refinance share of mortgage activity increased to 39.2% of total applications, up from 34.7% the previous week.
The adjustable-rate mortgage (ARM) share of activity decreased to 6.3% of total applications.