US mortgage applications fall following weekly surge

US mortgage applications fell 1.5% in the week ended 15 December, according to the Mortgage Bankers Association of America, dropping from a 7.4% surge a week earlier and halting a six-week run of increased applications.

Applications to refinance a home dropped by 2% but remained 18% higher year-on-year, while applications to purchase a home were 1% lower week-on-week but also remained 18% higher on an annualised basis.

Last week's decline comes even as the average contract interest rate for 30-year fixed-rate mortgages continued to fall, dropping to 6.83% from 7.07% a week earlier, and a decline in benchmark bond yields this week due to dovish signals sent by Federal Reserve members.

MBA chief economist Mike Fratantoni said: "With the positive news about the drop in inflation, and the FOMC projections proclaiming a pivot towards rate cuts, the 30-year fixed mortgage rate reached its lowest level since June 2023."

Reporting by Iain Gilbert at Sharecast.com