Average Mortgage Rates Fall To 4-Month Low
Mortgage Applications Surge
The latest data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey brings positive news for prospective homebuyers and those considering refinancing their homes. Mortgage applications experienced a significant uptick of 2.8% for the week ending December 1, 2023.
Joel Kan, MBA's Vice President and Deputy Chief Economist, attributes the surge in mortgage applications to declining mortgage rates. The 30-year fixed-rate mortgage, in particular, dropped to 7.17%, its lowest level since August 2023. This decline is a result of slower inflation and financial markets anticipating a potential end to the Fed's hiking cycle.
Purchase and Refinance Activity
While the seasonally adjusted Purchase Index experienced a slight decrease of 0.3% from the previous week, the unadjusted Purchase Index saw an impressive 35% increase compared to the prior week. However, it's essential to note that purchase applications remain 17% lower than the same week one year ago. This can be attributed to challenges such as low inventory and affordability constraints.
One of the standout findings is the 14% increase in the Refinance Index compared to the previous week. Additionally, the Refinance Index is 10% higher than the same week one year ago, signaling a resurgence in refinance applications. This marks the second consecutive week in which refinance applications have increased on a year-over-year basis.
The refinance share of mortgage activity increased to 34.7% of total applications, up from 30.6% the previous week. While the overall level of refinance applications remains relatively low, these recent increases suggest that 2023 might have marked the low point in the refinance cycle.
- The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased to 7.17% from 7.37%.
- Jumbo loans also saw a decline in rates, dropping to 7.35% from 7.54%.
- FHA-backed mortgages experienced a rate decrease to 6.98% from 7.18%.