Mortgage applications rose by 3.8 from the prior week for the week ending on December 6, according to the Mortgage Bankers Association.
The Refinance Index rose 9% from the prior week and 146% higher than the same week a year ago.
"Low mortgage rates continue to be the trend as 2019 comes to an end, and mortgage applications responded accordingly last week, rising 3.8%. The 30-year fixed mortgage rate remained under 4% for the fourth straight week, and rates for FHA loans declined close to their lowest level of the year. The decrease in FHA rates led to a 27% jump in refinance applications for those loans, and their share of refinance activity—at 14%—was the highest since 2016," said Joel Kan, MBA's AVP of Economic and Industry Forecasting. "Purchase applications were down slightly, but were 5% higher than a year ago, which is in line with the gradual growth in the purchase market seen throughout this year."
Ellie Mae reported last month that refinances accounted for 51% of all closed loans in October—the highest percentage since March 2015.
Purchases accounted for 49% of total closed loans, which is a 2% decline from the prior month. This occurred during the same time mortgage rates rose, as the 30-year mortgage rate increased to 3.94% for all closed loans—up from 3.93% in September.
“Interest rates continued to decline in October which had homeowners reaching out to lenders as they look to save on their monthly mortgage payments,” said Jonathan Corr, President and CEO of Ellie Mae. “We are seeing refinances surpass 50% of closed loans, which is proof that homeowners are taking advantage of the opportunity to lock in lower rates.”
Kan continued, saying that the November jobs report found increased payroll gains and low unemployment and “conditions remain favorable for steady purchase growth in the coming months.”
The MBA reported that the refinance share of mortgage activity increased to 62.4% of the total applications from prior weeks’ 59%.
FHA applications accounted for 13.9% of all applications, which is an increase from the prior weeks’ 12% share. The VA share of total applications fell to 12.4% from the previous weeks’ 12.7%.