Mortgage applications fell 0.6% for the week ending Dec. 17, with fewer borrowers looking for purchases in the lower end of the market, according to the Mortgage Bankers Association (MBA) survey published on Wednesday.
The decrease was driven by the purchases index falling 3.3% from the previous week on a seasonally adjusted basis. Concurrently, the refi index increased 2.2% from the week prior.
Compared to a year ago, mortgage applications declined across the board. The overall market composite index dipped 31.9% on a seasonally adjusted basis. Refi apps fell 42.4% year over year, and purchase applications decreased 9.1% in the same period.
Joel Kan, the MBA’s associate vice president of economic and industry forecasting, said in a statement that the average purchase loan increased to $416,200. That marks the second-highest amount ever, indicating more activity in the higher end of the market.
He added, “Home-price appreciation growth remains faster than historical averages, and inventory, particularly for starter homes, continues to trail strong demand.”
Refinances gained share last week, representing 65.2% of total mortgage applications, up from 63.3% on the previous week. VA loans comprised 11.5%, an increase of nine basis points. Meanwhile, the share of FHA loans remained unchanged at 9.6% in the period. The share of USDA loans was 0.5%.
Regarding the refi market, Kan said rates at the lowest level in four weeks helped spur an increase across all loan types. For example, FHA and VA refis jumped 4% and 12%, respectively.
The trade group estimates that the average contract 30-year fixed-rate mortgage for conforming loans ($548,250 or less) decreased from 3.30% to 3.27%. For jumbo mortgage loans (greater than $548,250), rates went to 3.31% from 3.32% the week prior.
Economists expect that rates will increase in 2022 but will still be close to record-low levels. MBA forecasts that 30-year mortgage-rates will reach 4% by the end of 2022.
