
During the week ending December 6, there was a remarkable upswing in mortgage application volume, which increased by 5.4% after seasonal adjustments.
This surge was largely fueled by a striking 27% jump in refinancing activities, according to a report released by the Mortgage Bankers Association (MBA) on Wednesday.
Mortgage Application Trends
This recent rise in mortgage applications is the latest in a pattern of weekly gains, offering mortgage lenders a potentially optimistic outlook as they move toward 2025.
It’s worth noting that the MBA has revised its figures from the previous week to better reflect the impact of the Thanksgiving holiday.
On Wednesday, data from HousingWire’s Mortgage Rates Center revealed that the average interest rate for 30-year conforming loans dipped slightly to 6.85%, mirroring the trend highlighted in the MBA’s report.
The MBA’s vice president and deputy chief economist shared that this marks the third consecutive week of declining mortgage rates, with the 30-year fixed rate falling to 6.67%.
He emphasized that the notable rise in applications can be attributed mainly to a surge in refinancing, as homeowners with higher interest rates look to reduce their monthly payments.
Refinancing and Purchase Applications
While purchase applications took a hit, dropping 4% from the week before, they remain 4% higher compared to the same week last year, indicating strong ongoing demand for home purchases.
This resilience is supported by steady housing demand and a gradual build-up of inventory in many markets.
Refinancing now accounts for 46.8% of all mortgage applications, a significant jump from 38.7% the previous week, underscoring the robust interest in refinancing.
In contrast, activity around adjustable-rate mortgages (ARMs) fell for the second consecutive week, decreasing by 70 basis points to 5.3%.
On the government loan side, there was a slight uptick in applications.
The share for Federal Housing Administration (FHA) loans rose by 50 basis points to 16.5%, while the U.S. Department of Veterans Affairs (VA) loans saw a notable increase, climbing by 270 basis points to represent 16.3% of applications.
Meanwhile, U.S. Department of Agriculture (USDA) loans held steady at 0.4%.
Loan Limits and Interest Rates
The MBA report also looked into the average contract interest rates for different loan types.
For 30-year conforming loans, the average fell by 2 basis points to 6.67%, while 30-year jumbo loans decreased by 6 basis points to 6.79%.
Rates for 15-year loans remained unchanged at 6.12%, and 5/1 ARMs experienced a noticeable decline of 43 basis points, bringing their rate down to 5.81%.
In a recent update, the Federal Housing Finance Agency (FHFA) announced it would be increasing conforming loan limits for 2025, setting the new limit for single-unit properties at $806,500—a 5.2% rise from current standards.
Simultaneously, the FHA plans to revise its loan limits, raising the minimum to $524,224 and the maximum to $1,209,750.
These adjustments are driven by escalating home prices and ongoing affordability challenges faced by buyers.
Source: Housingwire