Mortgage Apps: Continue to Decline with Higher Rates

Bottom Line: Mortgage applications fell again last week as the 30-year fixed-rate mortgage held over 4.25%. Both applications for refinancing and purchases fell. The refinance index is sharply below its 13-week average, its lowest level in 18 months. Finally, the share of adjustable rate mortgages continued to rise, now 6.2% of all mortgages, the highest since February, as borrowers look to keep payments low with the 5-year fixed, 30-year amortizing mortgage rate at 3.28% on average last week, down from 3.39%. The MBA Mortgage Applications Index FELL by 4.0% during the week ended December 9 to 397.5, sharply below its 13 week average of 477.4 and 5.2% BELOW its year ago level. The Purchase Index FELL by 3.3% to 226.7, modestly above its 13 week average of 219.8 and 2.3% ABOVE its year ago level. The level of purchase activity had stayed quite low after the crisis until 2015 when it started to rise. But that trend has lost momentum since mid-2016. The Refinance Index FELL by 3.6% to 1,407. With this decline, refinancing activity is sharply below its 13 week average of 1,959 and 11.7% BELOW its year ago level. Contract Mortgage Rates were MIXED with the 30-year fixed rate increasing by 1 bp to 4.28% and with the 15-year fixed rate declined by 1 bp to 3.52%.