Mortgage applications rose by 1.6% on a seasonally-adjusted basis from one week earlier for the week ending December 7th, 2018, according to the Mortgage Bankers Association’s latest Weekly Mortgage Applications Survey.

On an unadjusted basis, the Market Composite Index, a measure of mortgage loan application volume, fell 1% from the previous week. The Refinance Index rose 2% over the same period. The seasonally-adjusted Purchase Index rose 3% from one week earlier, and the unadjusted Index fell 2%.

“Mortgage rates fell across the board last week, driven by a similar slide in Treasuries. Trade fears dominated investors’ concerns for another week, and this was amplified by data released by the U.S. Commerce Department showing a widening trade deficit,” says Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “The 30-year fixed mortgage rate decreased 12 basis points over the week back below 5 percent, representing the largest single week drop since 2017.”

The refinance share of mortgage activity rose to its highest level since March 2018 at 41.5%, up from 40.4% the previous week. The adjustable-rate mortgage (ARM) share rose to 7.6% of total applications. The FHA share of total applications rose to 10.8% from 10.2%, the VA share rose to 10.2% from 10.0%, and the USDA share rose to 0.7% from 0.6%.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) fell to its lowest level since September 2018 at 4.96%, down from 5.08%. Points for 80% loan-to-value ratio (LTV) loan reports rose to 0.48 from 0.40 the previous week. (All 80% LTV loan reports include the origination fee.) The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100) fell to 4.80%, the lowest level since September, from 4.89%. Points for 80% LTV loans rose to 0.33 from 0.30, and the effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA fell to 4.97%, the lowest level since September, from 5.05%. Points for 80% LTV loans fell to 0.55 from 0.62, and the effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages fell to 4.41%, the lowest level since September, from 4.50%. Points for 80% LTV loans fell to 0.44 from 0.60, and the effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs fell to 4.24% from 4.33%. Points for 80% LTV loans rose to 0.34 from 0.21, and the effective rate decreased from last week.

“As a result of these recent rate declines, we saw another weekly increase in refinance applications, along with a rise in the average refinance loan size. Larger loans tend to react more readily for a given change in mortgage rates. Meanwhile, purchase application activity also increased over the week and was up more than three percent compared to a year ago,” Kan added.