Mortgage applications barely nudged as interest rates start to reach levels that the industry hasn't seen in more than two years.
According to the latest Mortgage Bankers Association’s Weekly Mortgage Applications Survey, mortgage applications slightly dipped .7% from one week earlier for the week ending Dec. 2.
This is marginally better than the 9.4% decline in mortgage application in the previous report. However, the week’s results included an adjustment for the Thanksgiving holiday. The week prior to this one reported a 5.5% increase in mortgage applications.
A big reason behind the lack of mortgage applications is the drop in refinance applications.
The refinance share of mortgage activity sits at 56.2% of total applications, which is only a little higher than last week’s 55.1%.
On the other side, the adjustable-rate mortgage share of activity increased to 6% of total applications, the highest level since February 2016.
The Refinance Index decreased 1% from the previous week, as the seasonally adjusted Purchase Index increased 0.4% from one week earlier.
While all three of the following posted increases, they were very small. The FHA share of total applications increased to 11.3% from 10.4% the week prior, as the VA share of total applications increased to 12.6% from 11.7% the week prior. The USDA share of total applications increased to 0.9% from 0.8% the week prior.
Here’s a look at the latest interest rate levels.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to its highest level since October 2014: 4.27%, from 4.23%.
It was only in the last report that the average contract interest rate for 30-year fixed-rate mortgages reached its highest level since July 2015.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to its highest level since September 2014: 4.22%, from 4.18%.
In addition, the average contract interest rate for 30-year fixed-rate mortgages backed by the FHA remained unchanged at its highest level since July 2015: 4%.
The average contract interest rate for 15-year fixed-rate mortgages increased to its highest level since September 2014, 3.53%, from 3.48%, while the average contract interest rate for 5/1 ARMs increased to its highest level since September 2013 at 3.39%, from 3.23%.
