MBA Weekly Applications Survey July 4, 2021: Apps Rebound Strongly

Mortgage applications bounced back last week after two straight weeks of steady decline as interest rates fell sharply, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending July 9.

This week’s results include an adjustment for the Fourth of July holiday.

The Market Composite Index increased by 16 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 7 percent compared to the previous week.

The unadjusted Refinance Index increased by 20 percent from the previous week but was 29 percent lower than the same week one year ago. The refinance share of mortgage activity increased to 64.1 percent of total applications from 61.6 percent the previous week.

The seasonally adjusted Purchase Index increased by 8 percent from one week earlier. The unadjusted Purchase Index decreased by 13 percent compared to the previous week and was 29 percent lower than the same week one year ago.

The FHA share of total applications decreased to 9.5 percent from 9.8 percent the week prior. The VA share of total applications decreased to 10.3 percent from 10.8 percent the week prior. The USDA share of total applications remained unchanged from 0.5 percent the week prior.

“Overall applications climbed last week, driven heavily by increased refinancing as rates dipped again,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Treasury yields have trended lower over the past month as investors remained concerned about the COVID-19 variant and slowing economic growth.”

Kan noted with the 30-year fixed rate hitting its lowest level since February, refinance applications increased by more than 20 percent after adjusting for the July 4 holiday, “Also, there may have been a delayed spillover of applications from the previous week, when rates also decreased but there was not much of response in terms of refinance applications,” he said. “Purchase applications increased last week, but average loan sizes decreased to their lowest level since January 2021. We continue to see ebbs and flows as housing demand remains strong but for sale inventory remains low. However, lower rates may be helping some home buyers close on their purchases, especially first-time home buyers. The year-over-year comparisons were down significantly for both purchase and refinance applications, as they were relative to a non-holiday week in 2020.”

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) decreased to 3.09 percent from 3.15 percent, with points decreasing to 0.37 from 0.38 (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 3.16 percent from 3.20 percent, with points decreasing to 0.27 from 0.28 (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 3.15 percent from 3.17 percent, with points decreasing to 0.29 from 0.32 (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 2.48 percent from 2.52 percent, with points increasing to 0.32 from 0.23 (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 increased to 3.02 percent from 2.94 percent, with points decreasing to 0.32 from 0.34 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The ARM share of activity increased to 3.5 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.