U.S. Mortgage Applications Gained Support from Refinancing Applications

Mortgage applications rose 2.8% w/w (-11.3% y/y) in the week ending December 1, after a 0.3% w/w (-15.4% y/y) rise in the week ending November 24, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey. The latest reading was the fifth successive weekly gain. Applications for loans to purchase a house eased 0.3% (-17.7% y/y) following the 4.7% (-19.9% y/y) rise in the prior week. In contrast, applications for loan refinancing jumped 13.9% (9.5% y/y) in the week ending December 1, after a decline of 8.9% (+0.7% y/y) in the week ending November 24.

Mortgage interest rates fell further, providing support for mortgage applications. The effective interest rate on a 30-year fixed-rate loan dropped 20bps to 7.35% in the week ending December 1, from 7.55% in the week ending November 24, and down from 7.81% in the November 3 week. The rate on 15-year fixed-rate mortgages fell 2bps to 6.99% in the latest week from 7.01% in the prior week. The rate on a 30-year Jumbo loan dropped 25bps to 7.47% in the week ending December 1, down from 7.72% in the prior week, while the rate on a 5-year ARM loan declined 3bps to 6.84% in the latest week from 6.87% in the week ending November 24.

The share of applications for refinancing an existing loan rose to 34.7% in the week ending December 1, up from 30.6% in the week ending November 24. The adjustable-rate mortgage (ARM) share of activity fell to 7.4% in the latest week from 8.1% in the prior week, the fifth consecutive w/w fall.

The average size of a mortgage loan declined 4.5% w/w (-1.5% y/y) to $345,900 in the week ending December 1, after a 3.2% (-1.4% y/y) rise to $362,300 in the week ending November 24. The average size of a loan to purchase a home decreased 3.6% (+2.4% y/y) to $396,500 in the latest week, after a 1.9% (2.8% y/y) rise to $411,100 the week ending November 24. The average size of a loan to refinance a mortgage eased 0.3% (-3.8% y/y) to $251,000 in the week ending December 1, following the 4.4% (-8.5% y/y) jump to $251,800 in the prior week.

The Mortgage Bankers Association Survey covers 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver’s SURVEYS database.