Mortgage applications have experienced a decline for the first time in five weeks, driven by rising rates across all loan categories, as reported by the Mortgage Bankers Association on Wednesday. The market composite index, which assesses the volume of loan applications, saw a decrease of 0.7% for the week ending December 13 on a seasonally adjusted basis.
Without seasonal adjustments, the index fell by 2% compared to the previous week. 'Mortgage rates increased last week, leading to overall mortgage application activity decreasing for the first time in five weeks,' stated Joel Kan, the association's deputy chief economist. The average interest rate for 30-year fixed-rate mortgages, with conforming loan balances of $766,550 or less, climbed to 6.75%, up from 6.67% the previous week.
For loan balances exceeding that amount, the rate rose to 6.86%, compared to 6.79% before. The 15-year loans also saw an increase, with rates rising to 6.15% from 6.12% week over week. Fixed-rate mortgages with 30-year terms, backed by the Federal Housing Administration, edged up to 6.49% from 6.47%.
The percentage of FHA loans, frequently utilized by first-time home buyers who benefit from lower down payments, increased to 17.6% of total applications, up from 16.5% the prior week. The refinance index experienced a drop of 3% from the previous week, largely influenced by declines in veteran affairs refinances, which fell by 17% following two weeks of gains.
However, on an annual basis, the refinance index exhibited a robust increase of 41%. The seasonally adjusted purchase index saw a slight uptick of 1% compared to the prior week. Unadjusted, the purchase index decreased by 2% week-over-week but remained 6% higher than the same period last year. 'Conventional and veteran affairs purchase applications were thekey drivers behind this week's rise in purchase activity, both weekly and annually,' Kan remarked.
'Despite rising rates, buyers have remained active in the market, buoyed by gradually improving inventory conditions and a more optimistic outlook on the economy and job market.'.