Mortgage applications increased 1.1 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.

The Market Composite Index, a measure of mortgage loan application volume, increased 1.1 percent on a seasonally adjusted basis from one week earlier. 

The Refinance Index increased 1 percent from the previous week and was 105 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 2 percent from one week earlier. 

"U.S. Treasury rates stayed low last week, in part due to uncertainty over the prospects of additional pandemic-related government stimulus, as well as concerns about the continued rise in COVID-19 cases across the country. Mortgage rates as a result fell to another survey low, with the 30-year fixed mortgage rate dropping five basis points to 2.85 percent," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Homeowners once again acted on the decline in rates, with refinance activity rising for the second straight week and up 105 percent from a year ago."  

Added Kan, "The ongoing strength in the housing market has carried into December. Applications to buy a home increased for the fourth time in five weeks, as both conventional and government segments of the market saw gains. Government purchase applications rose for the sixth straight week to the highest level since June - perhaps a sign that more first-time buyers are entering the market."    

The refinance share of mortgage activity increased to 72.7 percent of total applications from 72.0 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 1.8 percent of total applications.  

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to a survey low of 2.85 percent from 2.90 percent.

Meanwhile, a growing percentage of U.S. homeowners are looking to delay making mortgage payments, the latest sign that the economic recovery is hitting a snag, Bloomberg reported.

In the first week of December, the proportion of mortgage borrowers that started seeking forbearance relief rose to its highest level since August, according to the Mortgage Bankers Association. And call volume at the companies that collect payments rose to the highest level since April, a sign of growing distress among homeowners, the trade group said Monday.

With long-term unemployment rates rising and Covid-19 cases surging, “it is not surprising to see more homeowners seeking relief,” Mike Fratantoni, chief economist at the MBA, said in a statement.

The increasing number of homeowners that have started seeking mortgage forbearance comes even as the economy has shown signs of recovery, underscoring how uneven the turnaround is. U.S. household net worth reached a fresh record of $123.5 trillion in the third quarter, while almost 4 million workers have been unemployed for more than 27 weeks.

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