Homebuyer demand cooled last week after three weeks of increases.
An index tracking the volume of applications for home loans dropped 5 percent, seasonally adjusted, last week, according to the Mortgage Bankers Association.
The MBA metric, known as the purchase index, had reported increases for the previous three weeks. The average size of purchase loan applications also fell to $366,100 from a record high of $375,200 the prior week.
Joel Kan, MBA’s head of industry forecasting, said the decline was due to the increase in government loans, which tend to have lower balances, dragging down the average.
Kan maintained that despite last week’s decrease in applications, the purchase market is “poised to finish 2020 on a strong note.”
MBA’s index tracking refinance applications saw a 2 percent increase, unadjusted, last week and was up 89 percent year over year. Kan attributed that to mortgage rates once again hitting a record low in the 30-year history of MBA’s weekly survey of the mortgage market.
Rates for a 30-year, fixed-rate mortgage dropped two basis points to 2.90 percent from 2.92 percent. Jumbo rates increased to 3.20 percent from 3.19 percent.
Refinance applications accounted for 72 percent of the home loans MBA surveyed, up from 69.5 percent the week before.
The overall number of applications for home loans fell 1.2 percent, seasonally adjusted, according to MBA’s combined index. MBA’s survey covers 75 percent of the total residential mortgage market.