Mortgage applications increase as falling rates boost refis: MBA

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Mortgage applications rose 1.6% from one week earlier as falling interest rates contributed to a boost in refinance activity, according to the Mortgage Bankers Association.

"The 30-year fixed mortgage rate decreased 12 basis points over the week back below 5%, representing the largest single week drop since 2017," Joel Kan, the MBA's associate vice president of economic and industry forecasting, said in a press release.

The MBA's Weekly Mortgage Applications Survey for the week ending Dec. 7 found that the refinance index increased 2% from the previous week.

The refinance share of mortgage activity increased to 41.5% of total applications, the highest level since March 2018, from 40.4% the previous week.

The seasonally adjusted purchase index increased 3% from one week earlier, while the unadjusted purchase index decreased 2% compared with the previous week and was 4% higher than the same week one year ago.

Mortgage rates fell across the board last week, as trade fears dominated investors' concerns, "and this was amplified by data released by the U.S. Commerce Department showing a widening trade deficit," Kan said.

"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," he continued. "Larger loans tend to react more readily for a given change in mortgage rates."

Adjustable-rate loan activity increased to 7.6% from 7.4% of total applications, while the share of Federal Housing Administration-guaranteed loans increased to 10.8% from 10.2% the week prior.

The share of applications for Veterans Affairs-guaranteed loans increased to 10.2% from 10% and the U.S. Department of Agriculture/Rural Development share increased to 0.7% from 0.6% the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) decreased to 4.96% from 5.08%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100), the average contract rate decreased to 4.8% from 4.89%.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 4.97% from 5.05%. For 15-year fixed-rate mortgages, the average decreased to 4.41% from 4.5%.

The average contract interest rate for 5/1 ARMs decreased to 4.24% from 4.33%.

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Mortgage applications Refinance Purchase Mortgage rates Mortgage Bankers Association FHA The VA