Dec. 2 (UPI) -- Demand for mortgages to purchase homes increased 9% last week compared with the week before, and was 28% higher than a year ago, the Mortgage Bankers Association said Wednesday.
Demand for mortgages to refinance homes fell 5% for the week, but was 102% higher than a year ago. The Market Composite Index, which measures the volume of all mortgage applications, fell by a seasonally-adjusted 0.6%, or an unadjusted 32%, for the week.
"After adjusting for the Thanksgiving holiday, mortgage applications were mixed, with a jump in purchase applications and a decline in refinances," said Joel Kan, MBA's associate vice president of economic and industry forecasting.
"Purchase activity continued to show impressive year-over-year gains, with both the conventional and government segments of the market posting another week of growth."
Kan said the purchase loan amounts continue to be significantly higher than average over the past decade and hit $375,000 last week -- the largest since the start of MBA's weekly survey in 1990.
"Housing demand remains strong, and despite extremely tight inventory and rising prices, home sales are running at their strongest pace in over a decade," Kan said.
The average contract interest rate for a 30-year fixed-rate mortgage with a balance of $510,400 or less stayed at 2.92% last week, with points decreasing to 0.31 from 0.35.
"The sustained period of low mortgage rates continues to spark borrower demand, and the mortgage industry is poised for its strongest year in originations since 2003," Kan said.
"The ongoing refinance wave has been beneficial to homeowners looking to lower their monthly payments during these challenging economic times brought forth by the pandemic."