Mortgage Applications Dip Over the Christmas Holidays in U.S.

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The Market Composite Index, a measure of mortgage loan application volume, decreased 1.5 percent on a seasonally adjusted basis from two weeks earlier. On an unadjusted basis, the Index decreased 22 percent compared with two weeks ago.

The Refinance Index decreased 8 percent from two weeks ago and was 74 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 5 percent from two weeks ago. The unadjusted Purchase Index decreased 14 percent compared with two weeks ago and was 2 percent higher than the same week one year ago.

Added Fratantoni, "The end of the year is the slowest time for home sales, so it is not at all surprising that activity was light. However, after a seasonal adjustment, purchase application volume was up relative to the pre-holiday period and started off 2020 ahead of last year's pace. We expect that the strong job market will continue to support purchase activity this year, and the uptick in housing construction towards the end of last year should provide more inventory for prospective buyers."

While the index changes were calculated relative to two weeks prior, the following compositional and rate measures are presented relative to the previous week only.

The refinance share of mortgage activity increased to 58.9 percent of total applications from 54.8 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 3.8 percent of total applications.

The FHA share of total applications increased to 12.2 percent from 12.1 percent the week prior. The VA share of total applications increased to 14.1 percent from 13.9 percent the week prior. The USDA share of total applications decreased to 0.5 percent from 0.6 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased to 3.91 percent from 3.95 percent, with points increasing to 0.34 from 0.31 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.

The effective rate decreased from last week. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350) decreased to 3.88 percent from 3.92 percent, with points decreasing to 0.17 from 0.30 (including the origination fee) for 80 percent LTV loans.

The effective rate decreased from last week. The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.85 percent from 3.87 percent, with points decreasing to 0.23 from 0.28 (including the origination fee) for 80 percent LTV loans.

The effective rate decreased from last week. The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.35 percent from 3.37 percent, with points increasing to 0.29 from 0.28 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 3.19 percent from 3.27 percent, with points decreasing to 0.18 from 0.37 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.