While real estate activity has been somewhat abnormally well-paced despite the start of the slower season for sales, a new report from the Mortgage Bankers Association reveals activity fell significantly during the week ending December 14.
The MBA's Weekly Mortgage Application Survey shows applications fell 12.3 percent from the week before, while activity was also down 13 percent when the Market Composite Index was measured on an unadjusted basis. With major holidays of the year quickly approaching, many consumers likely avoided searching for a home and focused on shopping for gifts.
"Despite the Federal Reserve’s announcement last week that it would purchase an additional $45 billion in Treasury securities per month as part of its continuing quantitative easing effort, rates increased in the second half of the week," said Mike Fratantoni, vice president of research and economics for MBA. "As a result, refinance applications dropped sharply to the lowest level in over a month."
Low rates expected to prompt buying, refinancing in 2012
However, refinancing was also less popular than it has been in recent months, as the Refinance Index fell 14 percent from the week before, reaching the lowest level seen in more than a month. Refinances still made up the majority of activity in the middle of December, accounting for 83 percent of all applications, down from last week's 84 percent.
The seasonally adjusted Purchase Index also decreased 5 percent when compared to last week, and it was also 8 percent lower when looked at on an unadjusted level. Despite less activity from buyers, the PI was 9 percent higher than the same time last week.
Other mortgage records suggest record-low mortgage rates, which have kept activity high in 2012 will continue in the new year.
Freddie Mac's U.S. Housing and Economic Outlook for the month of December highlights expectations of rates below 4 percent throughout 2013, which means buyers and those looking to refinance their initial mortgage can do so affordably. Fixed-rate mortgage options have been considerably more popular among those refinancing. According to the survey, the share of adjustable-rate mortgage activity did increase , but still only represents 3 percent of all applications.