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Mortgage Applications Soar While Rates Inch Up

Mortgage applications took a solid year-over-year increase while mortgage rates saw a mild uptick, according to two new data reports.

Mortgage applications for new home purchases shot up by 42.2% year-over-year in December, as reported in the latest Mortgage Bankers Association (MBA) Builder Application Survey. However, the increase from November to December was a much more modest 0.2%.

The MBA estimated new single-family home sales were running at a seasonally adjusted annual rate of 876,000 units in December, a 5.9% increase from the November level of 827,000 units. On an unadjusted basis, MBA estimated that there were 59,000 new home sales in December 2020, unchanged from the previous month. the same level in November. The average loan size of new homes increased from $357,554 in November to $367,502 in December.

The MBA also reported that conventional loans composed 73.3% of loan applications last month, with FHA loans taking a 15.8% share, VA loans occupying 10% of the market and RHS/USDA loans claiming only a 0.9% share.

“Despite the ongoing economic impact of the pandemic, households seeking more space, assisted by low mortgage rates, drove the demand for new homes higher,” said Joel Kan, MBA's AVP of Economic and Industry Forecasting.

Separately, Freddie Mac’s latest Primary Mortgage Market Survey reported the 30-year fixed-rate mortgage averaged 2.79% with an average 0.7 point for the week ending January 14, 2021, up from last week when it averaged 2.65%. The 15-year fixed-rate mortgage averaged 2.23% with an average 0.7 point, up from last week when it averaged 2.16%. And the 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.12% with an average 0.4 point, up from last week when it averaged 2.75%.

“As Treasury yields have risen, it is putting pressure on mortgage rates to move up,” said Sam Khater, Freddie Mac’s Chief Economist. “While mortgage rates are expected to increase modestly in 2021, they will remain inarguably low, supporting homebuyer demand and leading to continued refinance activity. Borrowers are smart to take advantage of these low rates now and will certainly benefit as a result.”


About Author: Phil Hall

Phil Hall is a former United Nations-based reporter for Fairchild Broadcast News, the author of nine books, the host of the award-winning SoundCloud podcast "The Online Movie Show," co-host of the award-winning WAPJ-FM talk show "Nutmeg Chatter" and a writer with credits in The New York Times, New York Daily News, Hartford Courant, Wired, The Hill's Congress Blog and Profit Confidential. His real estate finance writing has been published in the ABA Banking Journal, Secondary Marketing Executive, Servicing Management, MortgageOrb, Progress in Lending, National Mortgage Professional, Mortgage Professional America, Canadian Mortgage Professional, Mortgage Professional News, Mortgage Broker News and HousingWire.

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