US mortgage applications rise 0.9% week-on-week

US mortgage applications rose 0.9% week-on-week in the seven days ended 16 December, according to the Mortgage Bankers Association of America.

Applications to refinance a home loan surged 6.0% as consumers took advantage of a fall in mortgage rates, while applications to purchase a home dipped 0.1%.

The increase follows a 3.2% advance in the previous week, the highest seen in three months, and comes as the 30-year mortgage rate dropped by eight basis points to 6.34% - the lowest level witnessed since the first week of September.

MBA chief economist Mike Fratantoni said: "The latest data on the housing market show that homebuilders are pulling back the pace of new construction in response to low levels of traffic, and we expect this weakness in demand will persist in 2023, as the US is likely to enter a recession.

"However, if mortgage rates continue to trend down, as we are forecasting, more buyers are likely to return to the market later in the year, as affordability improves with both lower rates and slower home-price growth."

Reporting by Iain Gilbert at Sharecast.com