MBA Weekly Applications Survey Oct. 6, 2021: Rising Rates Send Applications Tumbling
The highest interest rates since July sent mortgage applications—and in particular, refinance applications—down sharply, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending October 1.
The Market Composite Index fell by nearly 7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index dropped by 7 percent from the previous week.
The unadjusted Refinance Index fell by 10 percent from the previous week and was 16 percent lower than the same week one year ago. The refinance share of mortgage activity decreased to 64.5 percent of total applications from 66.4 percent the previous week.
The seasonally adjusted Purchase Index decreased by 2 percent from one week earlier. The unadjusted Purchase Index decreased by 2 percent from the previous week and was 13 percent lower than the same week one year ago.
“Higher rates are reducing borrowers’ incentive to refinance, as declines were seen across all loan types,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Purchase activity also fell, driven by a drop in conventional loan applications. Government purchase applications were up over 1 percent, but that was still not enough to bring down the average loan balance of $410,000. With home-price appreciation and sales prices remaining very elevated, applications for higher balance, conventional loans still dominate the mix of activity.”
The report said the FHA share of total applications increased to 10.5 percent from 10.4 percent the week prior. The VA share of total applications increased to 10.3 percent from 10.2 percent the week prior. The USDA share of total applications increased to 0.5 percent from 0.4 percent the week prior.
MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 3.14 percent from 3.10 percent, with points increasing to 0.35 from 0.34 (including origination fee) for 80 percent loan-to-value ratio loans. The effective rate increased from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $548,250) increased to 3.20 percent from 3.14 percent, with points decreasing to 0.27 from 0.33 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
The average contract interest rate for 30-year fixed-rate mortgages backed by FHA increased to 3.12 percent from 3.09 percent, with points increasing to 0.31 from 0.25 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.
The average contract interest rate for 15-year fixed-rate mortgages increased to 2.45 percent from 2.43 percent, with points decreasing to 0.24 from 0.29 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.
The average contract interest rate for 5/1 adjustable-rate mortgages decreased to 2.54 percent from 2.77 percent, with points unchanged at 0.16 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The ARM share of activity remained unchanged at 3.4 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.
