An economist said purchases have not yet picked up in response to the recent mortgage rate decline.
WASHINGTON – Mortgage demand decreased 9.4% for the week ending Dec. 29 compared to two weeks earlier even as rates remain at the lowest level since mid-2023, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey.
The Market Composite Index, a measure of mortgage loan application volume, showed the decline when seasonally adjusted from two weeks earlier. On an unadjusted basis, the index decreased 38% compared with two weeks ago.
The 30-year fixed mortgage rate ended 2023 at 6.76%, more than a percentage point lower than its peak of 7.9% in October, Joel Kan, MBA’s vice president and deputy chief economist, said.
“The recent decline in rates has given the housing market some cause for optimism going into 2024, but purchase applications have not yet picked up in response, with the overall level of purchase activity 12% lower than a year ago,” he said. “Refinance applications were still at very low levels but were 15% higher than a year ago.”
Kan added, “The housing market has been hampered by a limited supply of homes for sale, but the recent strength in new residential construction will continue to help ease inventory shortages in the months in come.”
The survey covers over 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100.
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Author: amyc