Mortgage application volume dipped 1.5% on an adjusted basis during the two weeks ended January 3, according to the Mortgage Bankers Association’s (MBA) Weekly Applications Survey.
The results include adjustments to account for the holidays.
Applications for refinances decreased 8% over the two-week period, while applications for purchases increased a surprising 5%.
Typically, purchase volume falls during the holiday period, but low mortgage rates, rising wages and a slight increase in inventory helped boost volume to finish out the year.
Despite the fact that refinance volume fell, it was nonetheless 74% higher compared with the same week one year earlier.
On an unadjusted basis, total volume fell 22%. Applications for purchases decreased 14% on an unadjusted basis but were up 2% compared with a year ago.
“Mortgage rates dropped last week, as investors sought safety in U.S. Treasury securities as a result of the events in the Middle East, with the 30-year fixed mortgage rate declining to its lowest level since early October,” says Mike Fratantoni, senior vice president and chief economist for the MBA, in a statement. “Despite lower rates, refinance volume decreased these last two weeks, and we expect that it will slowly trail off in the first half of 2020 as long as mortgage rates remain in this same narrow range. Homeowners would need to see a sharp drop in rates to reinvigorate the refinance wave seen in 2019.”
Fratantoni points out that “purchase application volume was up relative to the pre-holiday period and started off 2020 ahead of last year’s pace.”
“We expect that the strong job market will continue to support purchase activity this year, and the uptick in housing construction towards the end of last year should provide more inventory for prospective buyers,” he says.
During the week ended Jan. 3, the average rate for a 30-year fixed-rate mortgage, based on closings, was 3.91%, down from 3.95%.
The refinance share of mortgage activity increased to 58.9% of total applications, up from 54.8% the previous week.
The adjustable-rate mortgage (ARM) share of activity decreased to 3.8% of total applications.