Mortgage applications increased 12.8% for the week ending Dec. 2 as consumers rushed to refinance loans at low interest rates, an industry trade group said Wednesday.
The Mortgage Bankers Association also noted home purchase activity for the same week jumped with the purchase index increasing 8.3% from a week earlier.
Overall, the MBA found that its market composite index — a measure of total loan application volume — increased 12.8% over the previous week and the refinance index rose by 15.3%.
“Coming out of the Thanksgiving holiday, applications increased significantly as mortgage rates dropped to their lowest levels in about two months,” said Michael Fratantoni, MBA vice president of research and economics. “In particular, refinance applications increased sharply, with some lenders seeing refinance volume double. Despite this surge, aggregate refinance activity is still below levels reported two weeks ago. Some lenders indicated they are beginning to see an increase in HARP loans, but that increase is still a small portion of the move this week.”
Meanwhile, the refinance share of mortgage activity grew to 76% of total loan applications, up from 73.9% the previous week. In addition, the adjustable-rate mortgage share of activity declined to 5.7% from 5.8% of total applications from the prior week.
The average 30-year, fixed-rate mortgage rate on loans with balances less than $417,500 fell to 4.18% from 4.21% the previous week. The average, FRM on jumbo loans decreased to 4.52% from 4.55%, and the average 30-year, FRM backed by the FHA declined to 3.98% from 4%. In addition, the average 15-year, FRM declined to 3.53% from 3.58% as the average rate for 5/1 ARMs increased to 3.01% from 2.98%.
Of the home purchase applications, 85.5% were for fixed-rate 30-year loans.