With the holiday season in full force, mortgage application activity will likely slow, mirroring the decrease reported in the most recent Weekly Mortgage Applications Survey from the Mortgage Bankers Association.
According to data for the week ending November 23, even when accounting for the Thanksgiving holiday, the Market Composite Index fell 0.9 percent on a seasonally adjusted basis from the week before. Application volume is typically lower throughout November and December, as there are generally less properties listed for sale and the holidays can be a challenging time to relocate. When measure on an unadjusted basis, the MCI was down 24 percent.
MBA reports the seasonally adjusted Purchase Index posted a 3 percent gain from the previous week, though it was also down 24 percent when viewed on an unadjusted basis. Despite the notable decline when lacking adjustments, the PI was 8 percent higher than levels reported last week.
Record-low mortgage rates also beneficial to homeowners
The Refinance Index also saw a slight decline, falling 2 percent below the previous week. However, applications from current homeowners continued to account for 81 percent of the total volume, matching the previous two weeks.
As the average rate for adjustable-rate mortgages remains comparable to rates from last year, they seem to have become less desirable for buyers and those looking to refinance. According to the data released by MBA, applications for ARMs made up just 4 percent of activity this past week. Fixed-rate mortgages are generally a more popular option for first-time buyers, as they provide a set interest rate along with a stable monthly payment, which makes budgeting for monthly housing expenses more simple.
While some economists originally forecasted higher mortgage rates and home prices for 2012's end, rates for longer-term mortgages have fallen to new record-low levels three times in since the start of October, and could do so again before the end of the year. The steadily improving economy could also keep mortgage rates low.