Requests for purchase loans picked up last week during a short-lived drop in rates, MBA survey shows, helped by “gradually improving inventory conditions and a more positive outlook on the economy and job market.”
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Homebuyers remain poised to take advantage of ups and downs in mortgage rates, with requests for purchase loans picking up last week during a short-lived dip, according to a weekly survey of lenders by the Mortgage Bankers Association.
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Requests for purchase loans were up by a seasonally adjusted 1 percent from the week before and 6 percent from a year ago, according to the MBA’s Weekly Mortgage Applications Survey for the week ending Dec. 13.
VA loans and conventional mortgages eligible for purchase by Fannie Mae and Freddie Mac drove the increase in purchase loan applications, MBA Deputy Chief Economist Joel Kan said.
Joel Kan
“Buyers remained active in the purchase market, helped by gradually improving inventory conditions and a more positive outlook on the economy and job market,” Kan said in a statement. “Refinance applications declined last week, largely driven by VA refinances that were down 17 percent after two weeks of gains.”
Mortgage rates briefly dropped last week to levels not seen since late October, but have since rebounded.
Mortgage rates rebound
Rates for 30-year fixed-rate conforming mortgages hit a 2024 low of 6.03 percent on Sept. 17 on expectations for Fed rate cuts, according to rate lock data tracked by Optimal Blue.
But once the Fed did start cutting, mortgage rates bounced back to a fourth-quarter high of 6.85 percent on Nov. 20 — leaving many homeowners who bought or refinanced their homes when rates were low feeling locked in to the rate on their existing mortgage. Rates remain in the high sixes, averaging 6.74 percent as of Tuesday, Dec. 17.
Looking back a month, the MBA Builder Application Survey showed mortgage applications for new home purchases were up 7.2 percent in November from a year ago.
“Applications to purchase newly built homes have seen annual increases since February 2023, as prospective homebuyers continue to favor new homes, given affordability challenges and constrained existing inventory,” Kan said.
In their latest housing forecast, economists at Fannie Mae said new home sales are expected to remain a bright spot next year, with 755,000 projected sales representing 8.8 percent growth.
Mark Palim
Ups and downs in mortgage rates “may present opportunities for would-be homebuyers to take advantage of temporary lows, and we may see stretches where housing activity is boosted by lower rates,” Fannie Mae Chief Economist Mark Palim said.
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