Even though interest rates on home loans have ascended to the highest level in more than two-and-a-half years, new mortgage applications still accelerated.
Loan applications during the week ended Dec. 16, as measured by the Market Composite Index, rose a seasonally adjusted 3 percent from the prior week.
Even when seasonal adjustments are not applied,
new applications for residential loans still moved higher by 2 percent on a week-over-week basis.
The index is derived from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey. The survey reportedly covers more than three-quarters of all retail applications.
Acceleration in loan applications came despite that 30-year fixed rates rose to 4.41 percent — the highest level since May 2014.
MBA reported that applications for refinances increased 3 percent from the week ended Dec. 9. Refinance share widened to 57.9 percent from 57.2 percent but thinned from 62.8 percent the same week last year.
A seasonally adjusted 3 percent increase from a week earlier was recorded for purchase-money applications. But without seasonal adjustments, purchase financing activity dipped less than a percent and inched up 1 percent from the week ended Dec. 18, 2015.
The trade group noted that the average loan size for purchase applications was $312,000, the second-highest level ever for the survey, which has been conducted since 1990.
Applications for mortgages insured by the Federal Housing Administration made up 11.5 percent of all activity, down from 11.6 percent the prior week. FHA share was 12.9 percent the same week in 2015.
Another 12.0 percent of applications were for loans guaranteed by the Department of Veterans Affairs. VA share widened from 11.9 percent in the last report
and 10.5 percent a year previous.
The jumbo-conforming spread
swung to a negative 5 basis points from a positive 1 basis point and was thinner than a negative 12 BPS twelve months earlier.
Applications for adjustable-rate mortgages accounted for 6.5 percent of total applications — the widest share since February. ARM share was
6.2 percent a week earlier and 6.1 percent a year earlier.
