Mortgage Activity Sees Holiday Slump

Mortgage Weekly Update

Applications to both purchase a home and refinance one dropped over the holidays. According to the latest survey from the Mortgage Bankers Association, overall mortgage activity fell 4.2% in the last two weeks, despite mortgage rates hovering right around all-time lows.

Purchase loans were down 0.8%, while refinances dropped 6%. These drops are typical of the holiday season, according to Joel Kan, MBA’s associate vice president of economic and industry forecasting.

Fortunately, it shouldn’t last for long. MBA and other industry players are projecting strong mortgage activity across the new year.

“The steady demand for home buying throughout most of 2020 should continue in 2021,” Kan said. “MBA is forecasting for purchase originations to rise to $1.59 trillion this year, which would be an all-time high.”

The only sector to see a bump this week was VA lending. According to MBA’s data, the total share of VA applications jumped from 12.1% of all loans to 13.6%. 

More in mortgage and housing news

  • The number of mortgage loans in forbearance held steady this week, with 5.53% of all loans currently on a forbearance plan. This amounts to about 2.7 million homeowners total, according to MBA.
  • The Department of Housing and Urban Development has extended its foreclosure and eviction moratorium on FHA-backed properties. The measures will now remain in effect until February 28, 2021.
  • The Federal Housing Finance Agency has extended its mortgage forbearance options for multifamily property owners. These borrowers can now file for forbearance through March 31, 2021.
  • According to a new report from CoreLogic, home prices jumped a whopping 8.2% nationally in November. It was the highest year-over-year jump since early 2014. The company’s forecast projects that price appreciation will start to slow this year, eventually reaching 2.5% by November 2021.
  • Pending home sales were down in November, according to the National Association of REALTORS®. Sales dipped 2.6% for the month. Fortunately, there was a silver lining: Contract signings were up, increasing 16.4% over the same period.

This week in mortgage rates

Mortgage rates remained around record lows this week on all loan products.

Here’s how rates looked for each loan type:

  • Conforming 30-year, fixed-rate loans: 2.86%
  • Jumbo 30-year, fixed-rate loans: 3.08%
  • FHA 30-year, fixed-rate loans: 2.95%
  • 15-year, fixed-rate loans: 2.40%
  • 5/1 adjustable-rate loans: 2.63%

Make sure to check back here next week for the latest news on interest rates.

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Aly Yale

Aly J. Yale is a freelance writer focusing on real estate, mortgage, and the housing market. Her work has been featured in Forbes, Bankrate, The Motley Fool, Business Insider, The Balance, and more. Prior to freelancing, she served as an editor and reporter for The Dallas Morning News. She graduated from Texas Christian University's Bob Schieffer College of Communication with a major in radio-TV-film and news-editorial journalism. Connect with her at AlyJYale.com or on Twitter at @AlyJwriter.