The latest Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending January 3 reveal that the share of mortgage applications fell 1.5% from the amount of submissions counted just two weeks prior.
These statistics were measured by the Market Composite Index, which accounts for all mortgage loan application volume.
MBA SVP and Chief Economist Mike Fratantoni suggested tensions in the Middle East contributed to the drop in applications.
“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 (3.91%) since early October,” he said.
Fratantoni then offered predictions for the near future of the rates: "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."
Hopeful words then were offered by Fratantoni: "The end of the year is the slowest time for home sales, so it is not at all surprising that activity was light. However, after a seasonal adjustment, 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.”
Fast on the heels of MBA’s report, Freddie Mac also released the results of its Primary Mortgage Market Survey (PMMS), which revealed a drop in mortgage rates across the board.
The 30-year fixed-rate mortgage fell to 3.64% from the prior week’s 3.72%.
“Mortgage rates fell to the lowest level in thirteen weeks, as investors sought the quality and safety of the U.S. Treasury fixed income markets. The drop in mortgage rates, combined with the strong labor market, should propel a continued rise in homebuyer demand,” said Sam Khater, Freddie Mac’s Chief Economist.