Mortgage applications fall back, ending five weeks of gains

The winter housing market has arrived early. 

Last week’s rising mortgage rates ended a five-week streak of application gains, the Mortgage Bankers Association reported. The trade group’s application metrics were stagnant for the week ending Dec. 13, with the overall Market Composite Index falling 0.7% from the prior seven days. 

The effective rate for 30-year fixed-rate conforming mortgages rose eight basis points to 6.75% last week. Interest in conventional and Department of Veterans Affairs-backed home loans moved the Purchase Index up 1% weekly, said Joel Kan, the MBA’s vice president and deputy chief economist. 

“Buyers remained active in the purchase market, helped by gradually improving inventory conditions and a more positive outlook on the economy and job market,” said Kan in a press release. 

The Refinance Index meanwhile fell 3% weekly, with VA refi activity falling back to earth after an 85% gain last week. Although rates were still moving in the wrong direction earlier this week, refi activity remains up 41% from the same time a year ago.

Many MBA indexes moved by single digits last week, while the Government Adjustable Rate Mortgage Index was up 24.1% weekly. The effective rate for 5/1 ARMs increased last week over 20 basis points to 6.03%.

Rates for the 30-year jumbo and 15-year FRM climbed by a few basis points, to 6.86% and 6.15%, respectively. While rates for Federal Housing Administration loans ticked up to 6.49%, points dropped from 0.91 to 0.79 and the effective rate fell. 

The slowdown also comes on the eve of the Federal Reserve’s Open Market Committee, which is expected to weigh a rate cut despite persistent inflation. Mortgage rates were trending down this summer before the FOMC’s first cut in September set off some rate instability.