Mortgage functions decelerate throughout the vacation season

Mortgage applications were down 4.2% in the last two weeks of 2020, but the Mortgage Bankers Association says strong demand for home purchases is likely to continue for most of the year.

The MBA's weekly mortgage application survey for the week ending Jan. 1 found the refinance index down 6% from two weeks ago. The unadjusted refinancing index was 34% lower than it was two weeks ago, although it was 100% higher than the same period a year ago. The results contain adjustments to take the holidays into account.

In the week of January 1, the refinancing ratio was 73.5%, while in the week of December 25, it was 72.9%.

“Mortgage rates started near record lows in 2021, particularly with the 30-year fixed rate at 2.86% and the 15-year fixed rate at a survey low of 2.4%. The record-low fixed rate mortgage rates are good news for borrowers looking to refinance or buy a home, as around 98% of all fixed rate loan applications are made, ”said Joel Kan, vice president of business and industry at MBA Forecasting a press release. "Despite these low rates, overall application activity fell sharply during the holiday season – which is typical every year."

The seasonally adjusted purchasing index fell by 0.8% compared to two weeks ago, while the unadjusted purchasing index fell by 30% compared to two weeks ago and was 3% higher than in the same week a year ago.

"The steady demand for home purchases throughout most of 2020 is likely to continue in 2021. MBA predicts that origins of purchases this year will rise to $ 1.59 trillion – an all-time high," Kan added.

According to the MBA's December forecast, the total volume for 2020 should be around $ 3.6 trillion, of which $ 1.4 trillion was purchased. For the year 2021 the organization expects a total production of 2.8 trillion US dollars.

While the changes in the index values ​​were calculated to the level two weeks ago, the changes in the application proportions and the mortgage interest relate to the week ending December 25, emphasized MBA.

The proportion of loan applications insured by the Federal Housing Administration remained unchanged from 10.1% in the previous week.

For loans guaranteed by Veterans Affairs, their share rose from 12.1% to 13.6%, and the U.S. Department of Agriculture / Rural Development share rose to 0.4% from 0.3% the week before.

The average contract rate for 30 year fixed rate mortgages with compliant loan balances ($ 510,400 or less) decreased 4 basis points to 2.86%. On 30-year fixed rate mortgages with jumbo loan balances (over $ 510,400), the average contract rate decreased 1 basis point to 3.08%.

The average contract rate for 30 year fixed rate mortgages backed by the FHA decreased 5 basis points to 2.9%. For 15-year fixed-rate mortgages, the average decreased 2 basis points to 2.4%. The average contract rate for 5/1 ARM increased 6 basis points to 2.63%.

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