Mortgage applications climb as rates ease
Kan pointed out that both purchase and refinance applications have shown gains in three of the past four weeks because of lower rates.
“Purchase activity that was put on hold last year due to the quick runup in rates is gradually coming back as rates ease and housing demand remains strong, driven by supportive demographics and the ongoing strength in the job market,” he said.
“Refinance applications increased this week and have rebounded by approximately 30% since the beginning of November,” added Doug Duncan, Fannie Mae’s chief economist. “However, with rates much higher today than they were this time last year, refinancing activity remains nearly 80% lower on a year-over-year basis.”
Refi dollar volume rose 6.5% week over week, according to Fannie Mae’s RALI weekly report. MBA’s report also showed that the refinance share of mortgage application volume grew from 31.2% to 33.9% week over week, while adjustable-rate mortgage activity fell to 6.6% of total applications.
“The average loan size on a purchase application increased to $428,500 – the largest average since May 2022,” Kan said. “This increase is a sign that the recent upward trend in purchase activity remains skewed toward larger loan sizes and less first-time homebuyer activity, as entry-level housing remains undersupplied, and buyers struggle with affordability in many markets.”