First-time buyers have contributed greatly to the five-week run of increased mortgage applications, however, refinances continue to account for the majority of activity. The most recent Weekly Mortgage Applications Survey from the Mortgage Bankers Association shows current homeowners accounted for 84 percent of the volume for the week ending December 7, while applications were up overall.
According to the survey, the Market Composite Index posted a 6.2 percent increase in applications when compared to the previous week. In addition, the index was also 6 percent higher when considered on an unadjusted basis. The seasonally adjusted Purchase Index saw a 1 percent gain, though it slipped 4 percent from the week before when measured on an unadjusted basis. With average rates for fixed-rate mortgages lingering near record lows set in November, according to Freddie Mac's Primary Mortgage Market Surveys, affordability has been extended. The government-sponsored enterprise said rates will also stay relatively low, not likely passing 4 percent within the next 12 months.
Data from MBA shows fixed-rate mortgage remain the most popular option requested by applicants, as the adjustable-rate mortgage share of volume matched last week's figure of 3 percent.
The Refinance Index saw a significant increase of 8 percent since the last report, reaching its highest level since October 12 this year. With low rates predicted throughout the first half of 2013, this will remain an affordable way for current homeowners to alter their first mortgage choice by selecting a longer term mortgage for a lower monthly mortgage payment or a shorter term alternative to pay less in interest over time.
"Continued uncertainty due to the lack of resolution regarding the fiscal cliff led interest rates lower last week, with mortgage rates reaching a new low in our survey," according to Mike Fratantoni, vice president of research and economics for MBA. "Refinancing activity increased, with the refinance index hitting its highest level in two months, and the refinance share reaching its highest level since January 2009. Applications for purchase increased for a fifth consecutive week, and are running almost ten percent above their level at this time last year."