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As mortgage rates continued to fall last week, mortgage applications fell in line and interest has once again risen in the nation’s housing market, as the Mortgage Bankers Association (MBA) reported mortgage applications increased 3.2% week-over-week, for the week ending December 9, 2022.
The Refinance Index increased 3% from the previous week, and was 85% lower than the same week just one year ago. The seasonally adjusted Purchase Index increased 4% from one week earlier. The unadjusted Purchase Index decreased 1% compared with the previous week and was 38 percent lower than the same week one year ago.
“Mortgage rates increased slightly after a month of declines, as financial markets reacted to mixed signals regarding inflation, and the Federal Reserve’s next policy moves. The 30-year fixed rate inched to 6.42%, which is still close to the lowest rate in a month,” said Joel Kan, MBA’s VP and Deputy Chief Economist. “Overall applications increased, driven by increases in purchase and refinance activity. However, with rates more than three percentage points higher than a year ago, both purchase and refinance applications are still well behind last year’s pace.”
Interest has returned to the refi space, as the MBA reports the refinance share of mortgage activity increased to 29.4% of total applications, up slightly from 28.7% the previous week. The dip in rates has also impacted the adjustable-rate mortgage (ARM) share of activity, as ARM activity increased slightly from 7.6% to 7.7% of total applications.
Fed actions today may force interest rates even lower, as the Federal Reserve hiked rates at the latest Federal Open Market Committee (FOMC) meeting, as the Committee voted to raise the borrowing rate half a percentage point, moving it between 4.25% and 4.5%
“The ongoing moderation in home-price growth, along with further declines in mortgage rates, may encourage more buyers to return to the market in the coming months,” added Kan.
By loan type, the FHA share of total applications decreased to 13.1%, down from 13.7% the week prior, while the VA share of total applications increased to 11.5% from 11.4% the week prior. Meanwhile, the USDA share of total applications remained unchanged at 0.6% from the week prior.
