Mortgage demand increased last week as mortgage rates fell to their lowest levels since August 2023, according to the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.
For the week ending December 1, total mortgage applications increased 2.8% compared to the prior week, the survey showed. The results include an adjustment for the observance of the Thanksgiving holiday.
Despite the recent dip in mortgage rates, the rates remain high and have kept conditions challenging for both prospective homebuyers and homeowners looking to sell. They have also continued to suppress refinance activity.
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"Mortgage rates declined last week, with the 30-year fixed-rate mortgage falling to 7.17 percent – the lowest level since August 2023,” said Joel Kan, MBA vice president and deputy chief economist. "Slower inflation, and financial markets anticipating the potential end of the Fed’s hiking cycle, are both behind the recent decline in rates.”
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Mortgage application highlights
The Market Composite Index, which measures mortgage loan application volume, increased 2.8% on a seasonally adjusted basis from the prior week, and decreased 43% on an unadjusted basis, MBA said.
The Purchase Index decreased 0.3% on a seasonally adjusted basis, compared to the prior week. On an unadjusted basis, the index increased 35% from the prior week and fell 17% from the same week a year ago.
The Refinance Index, which measures refinancing and prepayment activity, increased 14% from the prior week and was 10% higher than the same week a year ago. The refinance share of mortgage activity increased to 34.7% of total applications from 30.6% the previous week.
The FHA share of total applications increased to 15% from 13.5% the prior week. The VA share increased to 12.8%, from 12.6% in the week prior, and the USDA share remained unchanged at 0.5% from the week prior.
“Refinance applications saw the strongest week in two months, increasing on a year-over-year basis for the second consecutive week for the first time since late 2021,” Kan said. "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. Purchase applications remained 17 percent lower than a year ago, held back by low inventory and still-challenging affordability conditions.”
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