The mortgage market just had its strongest week in months

Key Takeaways:

– Falling mortgage rates led to increased demand for home loans
– Total home loan applications rose by 2.8% for the week ending Dec. 1
– Purchase applications increased by 35% week-over-week but were still lower than last year due to low inventory and affordability challenges
– Refinance applications had their strongest week in two months, rising by 14% on a weekly basis and exceeding 2022 levels for the second week in a row
– The adjustable-rate mortgage share decreased to 7.4% while the share of FHA and VA loan activity increased
– The share of USDA loan activity remained unchanged at 0.5%

HousingWire:

Falling mortgage rates last week brought increased demand.

Total home loan applications increased 2.8% for the week ending Dec. 1 compared to the previous week, according to data from the Mortgage Bankers Association (MBA). The 30-year fixed-rate mortgage averaged 7.17% last week.

Slower inflation and the confidence financial markets have that we are nearing the end of the Fed’s hiking cycle has brought mortgage rates to the lowest level since August.

Purchase applications rose by 35% week-over-week on an unadjusted basis, though they were 17% lower than a year ago. According to Joel Kan, MBA’s vice president and deputy chief economist, they were mostly held back by “low inventory and still-challenging affordability conditions.”

Meanwhile, refinance applications posted their strongest week in two months. The refinance index rose by 14% on a weekly basis and was 10% higher than a year ago. Refinance applications exceeded their 2022 levels for the second week in a row, a first since late 2021.  

“The overall level of refinance applications is still very low, but recent increases could signal that 2023 was the low point in this cycle for refinance activity, consistent with our originations forecast,” Kan said in a statement.

The adjustable-rate mortgage (ARM) share of activity decreased to 7.4% of total applications, down from 8.1% last week.

The share of Federal Housing Administration (FHA) loan activity increased to 15%, down from 13.5% the week prior. The share of Department of Veterans Affairs (VA) loan activity was 12.8%, up from 12.6% over the previous week, while the share of U.S. Department of Agriculture (USDA) loan activity remained unchanged at 0.5%.

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Property Chomp’s Take:

is a commonly used element in HTML coding that is used to create divisions or sections on a webpage. These divisions can be used to organize and structure the content of a webpage, making it easier for users to navigate and understand the information presented. In this article, we will discuss the recent increase in mortgage applications and how it relates to the current state of the housing market.

Last week, falling mortgage rates led to an increased demand for home loans. According to data from the Mortgage Bankers Association (MBA), total home loan applications rose by 2.8% for the week ending December 1 compared to the previous week. The 30-year fixed-rate mortgage averaged 7.17% during this period, which is the lowest level since August. This decrease in mortgage rates can be attributed to slower inflation and the confidence financial markets have in the Federal Reserve’s hiking cycle coming to an end.

One significant trend observed was the rise in purchase applications, which increased by 35% on an unadjusted basis week-over-week. However, compared to the same period last year, purchase applications were 17% lower. Joel Kan, MBA’s vice president and deputy chief economist, explains that the low inventory and challenging affordability conditions have hindered the growth of purchase applications.

On the other hand, refinance applications posted their strongest week in two months. The refinance index rose by 14% on a weekly basis and was 10% higher than a year ago. This marks the second consecutive week that refinance applications have exceeded their 2022 levels, suggesting that 2023 may have been the low point in this cycle for refinance activity.

The share of adjustable-rate mortgage (ARM) activity decreased to 7.4% of total applications, down from 8.1% the previous week. Meanwhile, the share of Federal Housing Administration (FHA) loan activity increased to 15%, up from 13.5% the week before. The share of Department of Veterans Affairs (VA) loan activity also saw a slight increase to 12.8%, while the share of U.S. Department of Agriculture (USDA) loan activity remained unchanged at 0.5%.

Overall, the recent increase in mortgage applications can be seen as a positive sign for the housing market. The combination of falling mortgage rates and increased demand indicates that more people are looking to purchase homes or refinance their existing mortgages. However, challenges such as low inventory and affordability issues continue to impact the market. It will be interesting to see how these trends evolve in the coming months and what impact they will have on the overall housing market.

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