This week mortgage rates have decreased noticeably compared to one week earlier, according to Freddie Mac, and mortgage applications from one week ago demonstrated an increase over the previous week.

30-year fixed-rate mortgages dropped considerably this week to 3.81% compared to 3.92% the previous week.

15-year fixed-rate mortgages also decreased significantly from 3.19% last week to 3.1% this week.

5/1-year adjustable-rate mortgages also exhibited a noticeable reduction from 3.01% one week ago to 2.91% this week.

This significant decrease in mortgage rates occurred following a 9% increase in mortgage applications on the week ending January 15, 2016, according to the MBA Weekly Mortgage Applications Survey.

This increase in mortgage applications has impacted the refinance share of mortgage activity, which increased from 55.8% of total applications two weeks ago to 59.1% last week. The adjustable-rate mortgage share of activity also rose last week to 6% compared to 5.1% the previous week.

However, the FHA share of all applications dropped to 13.7% last week compared to 14.4% a week earlier, and the VA share of total applications also decreased, from 12.2% two weeks ago to 10.8% one week ago. The USDA share of all mortgage applications decreased as well, reaching 0.7% last week compared to 0.8% the previous week.

Although there has been an increase in mortgage applications this week, during December 2015, the application for new home purchases dropped 5% compared to a month earlier, as stated by the MBA Builder Application Survey. It is also estimated that there was an 8% decrease in single-family home sales during December. The estimated total of about 34,000 new home sales during that month did not compare favorably with the 37,000 new home sales reported in November 2015. However, the poor performance of new home sales during December 2015 was still a 17% improvement over sales in December 2014.

Of mortgage loans taken out during December, 68% of all loan applications were for conventional loans, FHA loans composed 18.5% and VA loans were 12.6% of all applications. The USDA loans amounted to 1% of total applications.

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