After jumping an impressive 7.3% the week prior, mortgage application volume fell 3.3% on an adjusted basis during the week ended Dec. 12, according to the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.
On an unadjusted basis, volume fell 4% compared with the previous week.
Applications for purchases fell 7%, on an adjusted basis, while applications for refinances were flat.
On an unadjusted basis, purchase volume was down 10% compared to the previous week and was 5% lower compared to the same week one year ago.
‘Amid plummeting oil prices and heightened concerns regarding global economic growth, interest rates dropped sharply through the course of the week, with longer-term Treasury yields falling more than 10 basis points,’ says Mike Fratantoni, chief economist for the MBA, in a release. ‘The average mortgage rate also dropped during the week, with several lenders offering 30-year fixed-rate loans with rates below four percent.
‘Surprisingly, given this large drop in rates, applications for conventional refinance mortgages did not increase last week, but there was a notable pickup in government refinance applications, which were up 11 percent for the week, led by an almost 16 percent increase in Veterans Affairs (VA) refinance applications,’ Fratantoni adds.
The refinance share of mortgage activity increased to 66% of total applications, up from 64% the previous week to reach the highest level since December 2013.
The average rate for a 30-year fixed-rate mortgage (FRM) with conforming loan balance ($417,000 or less) was 4.06%, down from 4.11% the previous week to reach the lowest level since May 2013.
The average rate for a 30-year FRM with jumbo loan balance (greater than $417,000) was 3.99%, down from 4.07% to reach the lowest level since May 2013.
The average rate for a 30-year FRM backed by the Federal Housing Administration (FHA) was 3.86%, down from 3.87%.
The average rate for a 15-year FRM was 3.33%, down from 3.35%.
The average rate for a 5/1 adjustable-rate mortgage (ARM) was 3.00%, down from 3.11% the previous week.
The ARM share of activity decreased to 6.2% of total applications.
Looking at application volume by loan type, applications for mortgages backed by the FHA represented 8.7% of all applications, down from 9.0% the previous week. Applications for VA mortgages represented 10.6% of all loans, up from 9.6% the previous week. Applications for mortgages through the U.S. Department of Agriculture remained unchanged at 0.8% of total applications.
The survey covers about 75% of all U.S. transactions. Rates quoted are based on closings.