Mortgage applications fell during the week ended December 14 with both refinancing and purchase applications slowing as rates rose.  The Mortgage Bankers Associations (MBA) Market Composite Index, a measure of that volume, was down 12.3 percent on a seasonally adjusted basis from the week ended December 7 and down 13 percent unadjusted.

The Refinancing Index decreased 14 percent from a week earlier to the lowest level since November 2 and refinancing as a share of all applications decreased from 84 percent to 83 percent.   Twenty-five percent of refinancing applications were done through the Home Affordable Refinance Program (HARP). The seasonally adjusted Purchase Index was 5 percent lower than the previous week and the unadjusted Purchase Index was down 8 percent week-over-week but was 9 percent higher than during the same period in 2011.

 "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, MBA's Vice President of Research and Economics. "As a result, refinance applications dropped sharply to the lowest level in over a month."

Purchase Index vs 30 Yr Fixed

Refinance Index vs 30 Yr Fixed

Mortgage rates were mixed.  The average contract rate for 30-year fixed-rate mortgages (FRM) with conforming balances of $417,500 or less increased to 3.50 percent with 0.44 point from 3.47 percent with 0.36 point and the effective rate also increased. 

Rates for the jumbo version of the 30-year FRM fell to the lowest rate in the history of MBA's Weekly Applications Survey, 3.73 percent with 0.29 point.  The previous week the rate was 3.77 percent with 0.35 point.  The effective rate was also down.

The contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.34 percent from 3.32 percent, with points increasing to 0.54 from 0.51 and the effective rate increased.

Another record low was recorded for the contract rate of the 15-year FRM at 2.83 percent, down 2 basis points.  Points were unchanged at 0.26 and the effective rate was lower. 

Adjustable rate mortgages (ARMs) continue to draw only a miniscule 3 percent share of applications. The contract interest rate for 5/1 ARMs decreased to 2.61 percent from 2.63 percent, with points increasing to 0.36 from 0.34.  The effective rate decreased from last week. 

Rates quoted are averages for mortgages with 80 percent loan-to-value ratios and points include the origination fee.  MBA's survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990.  Respondents include mortgage bankers, commercial banks and thrifts.  Base period and value for all indexes is March 16, 1990=100.

MBA's offices will be closed during the week of December 24 through January 2.  Results of its weekly application survey will resume on January 3 and will cover the two prior weeks.