Over the past three weeks, the study found, rates are up 15 basis points, and refinance activity has declined over 18%. Despite higher mortgage rates, the study shows purchase applications had a strong week, mostly driven by a 6% increase in conventional loan applications. Conventional loans tend to be larger than government loans, and this was evident in the average loan amount, which increased to $414,700 – the highest since February, Kan said.
As home-price appreciation continues at a double-digit pace, buyers of newer, pricier homes continue to dominate purchase activity, while the share of first-time buyer activity remains depressed: “The refinance share of mortgage activity decreased to 59.4% of total applications from 63.1% the previous week,” Kan said.
Among the study’s other findings:
The adjustable-rate mortgage (ARM) share of activity increased to 3.6% of total applications.
- The FHA share of total applications increased to 8.9% from 8.6% the week prior. The VA share of total applications decreased to 10.0% from 10.3% the week prior.
- The USDA share of total applications increased to 0.5% from 0.4% the week prior.
- The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 3.31percent from 3.24%, with points increasing to 0.43 from 0.36 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.
- The effective rate increased from last week. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $548,250) decreased to 3.27% from 3.28%,with points increasing to 0.35 from 0.26.
The findings erase the modest gain for mortgage loan applications of 1.8% that was posted on Nov. 19. “The financial markets continue to discern the Federal Reserve’s policy path in the coming months in light of the current high growth, high inflation environment,” Kan said at the time. “Despite a fair amount of rate volatility last week, mortgage rates were higher, with the 30-year fixed rate increasing four basis points to 3.24%.”