MBA Weekly Applications Survey June 9, 2021: Fewer Borrowers Despite Low Rates

Mortgage application activity fell again from one week earlier, despite a slight uptick in purchase applications, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending June 4. 

The week’s results include an adjustment for the Memorial Day holiday.

The Market Composite Index decreased by 3.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 13 percent compared to the previous week. 

The unadjusted Refinance Index decreased by 5 percent from the previous week and was 27 percent lower than the same week one year ago. The refinance share of mortgage activity decreased to 60.4 percent of total applications from 61.3 percent the previous week.

The seasonally adjusted Purchase Index increased by 0.3 percent from one week earlier. The unadjusted Purchase Index decreased by 11 percent compared to the previous week and was 24 percent lower than the same week one year ago.

The FHA share of total applications decreased to 9.5 percent from 9.6 percent the week prior. The VA share of total applications increased to 11.2 percent from 10.9 percent the week prior. The USDA share of total applications remained unchanged from 0.4 percent the week prior.

“Most of the decline in mortgage rates came late last week, with the 30-year fixed-rate mortgage declining to 3.15 percent. This likely impacted refinance applications,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “With fewer homeowners able to take advantage of lower rates, the refinance share dipped to the lowest level since April. Purchase applications were up slightly last week, and the large annual decline was the result of Memorial Day 2021 being compared to a non-holiday week, as well as the big upswing in applications seen last May once pandemic-induced lockdowns started to lift.”

Kan noted the average loan size on a purchase application edged down to $407,000, below the record $418,000 set in February, but still far above 2020’s average of $353,900. “Home-price growth continues to accelerate, driven by favorable demographics, the recovering job market and economy and housing demand far outpacing supply,” he said.

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) decreased to 3.15 percent from 3.17 percent, with points decreasing to 0.34 from 0.39 (including origination fee) for 80 percent loan-to-value ratio loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $548,250) decreased to 3.29 percent from 3.34 percent, with points decreasing to 0.32 from 0.38 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by FHA decreased to 3.12 percent from 3.16 percent, with points increasing to 0.34 from 0.31 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.52 percent from 2.56 percent, with points decreasing to 0.29 from 0.31 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 adjustable-rate mortgages remained unchanged 2.54 percent, with points increasing to 0.30 from 0.29 (including origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.

The ARM share of activity increased to 3.9 percent of total applications.

The survey covers more than 75 percent of all U.S. retail and consumer direct residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts.