Purchase And Refinancing Applications Decline Despite Lower Interest Rates

A decline in mortgage rates failed to entice home buyers and refinancing homeowners in the 2 weeks ending December 28, with composite mortgage applications falling 8.5 percent from the previously reported December 14 week (The MBA was closed for the holidays and skipped the December 21 week report). Purchase applications fell an unadjusted 8.2 percent during the period, taking the year-on-year comparison down 7 percentage points to minus 5 percent. Applications for refinancing, which tend to be more sensitive to interest rates, nevertheless registered a 12.3 percent decline in the 2-week period. The average interest rate on 30-year fixed-rate conforming mortgages ($453,100 or less) decreased by 10 basis points to 4.84 percent, the lowest level in more than 3 months. Purchase applications ending the year in negative year-on-year territory and falling mortgage applications despite the recent decline in mortgage rates is not good news for the housing market, which has shown progressive weakness in 2018 in part due to declining affordability stemming from sharply rising financing costs.