Mortgage Applications Decrease in MBA Weekly Survey

Rates rose to a three-month high last week, and mortgage applications dropped, the Mortgage Bankers Association reported this morning in its Weekly Mortgage Applications Survey for the week ending February 5. 

The Market Composite Index decreased by 4.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 3 percent compared to the previous week. 

The unadjusted Refinance Index decreased by 4 percent from the previous week but was 46 percent higher than the same week one year ago. The refinance share of mortgage activity decreased to 70.2 percent of total applications from 71.4 percent the previous week.

The seasonally adjusted Purchase Index decreased by 5 percent from one week earlier. The unadjusted Purchase Index increased by 2 percent compared to the previous week and was 17 percent higher than the same week one year ago.

“Mortgage rates have increased in four of the first six weeks of 2021, with jumbo rates being the only loan type that saw a decline last week,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Despite some weekly volatility, Treasury rates have been driven higher by expectations of faster economic growth as the COVID-19 vaccine rollout continues. With the 30-year fixed rate increasing to 2.96 percent – a high not seen since last November – refinances declined, and their share of total applications dipped to the lowest level in three months. Government refinance applications did buck the trend and increase, and overall activity was still 46 percent higher than a year ago. Demand for refinances is still very strong this winter.”

Kan noted purchase applications cooled the first week of February, “but homebuyers are still very active. Purchase activity was 17 percent higher than last year, and the average purchase loan size continued to increase, reaching another survey high of $402,200, as the higher-priced segment of the market continues to perform well.”

The report said the FHA share of total applications increased to 9.5 percent from 9.1 percent the week prior. The VA share of total applications increased to 13.3 percent from 12.1 percent the week prior. The USDA share of total applications remained unchanged 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 2.96 percent from 2.92 percent, with points increasing to 0.36 from 0.32 (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) decreased to 3.11 percent from 3.12 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 30-year fixed-rate mortgages backed by FHA increased to 2.97 percent from 2.94 percent, with points increasing to 0.36 from 0.29 (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 2.50 percent from 2.44 percent, with points decreasing to 0.29 from 0.32 (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 increased to 2.92 percent from 2.88 percent, with points decreasing to 0.36 from 0.46 (including origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.

The ARM share of activity increased to 2.3 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.