Mortgage Applications Decrease in MBA Weekly Survey

With mortgage rates rising to a two-month high, mortgage applications fell last week, the Mortgage Bankers Association reported this morning in its Weekly Mortgage Applications Survey for the week ending January 15. 

The Market Composite Index decreased by 1.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 1 percent compared to the previous week. 

The unadjusted Refinance Index decreased by 5 percent from the previous week and was 87 percent higher than the same week one year ago. The refinance share of mortgage activity decreased to 72.3 percent of total applications from 74.8 percent the previous week.

The seasonally adjusted Purchase Index increased by 3 percent from one week earlier. The unadjusted Purchase Index increased by 9 percent compared to the previous week and was 15 percent higher than the same week one year ago.

The FHA share of total applications decreased to 9.3 percent from 9.6 percent the week prior. The VA share of total applications decreased to 13.8 percent from 15.8 percent the week prior. The USDA share of total applications remained unchanged from 0.4 percent the week prior.

“Market expectations of a larger than anticipated fiscal relief package, which is expected to further boost economic growth and lower unemployment, have driven Treasury yields higher the last two weeks,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “After a post-holiday surge of refinances, higher rates chipped away at demand. There was a 5 percent drop in refinance activity, driven by a 13.5 percent pullback in government refinances.”

Kan noted purchase applications remained strong based on current housing demand, rising over the week and up a noteworthy 15 percent from last year. “Homebuyers in early 2021 continue to seek newer, larger homes,” he said. “The average loan size for purchase loans jumped to $384,000, the second highest level in the survey.”

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) increased to 2.92 percent from 2.88 percent, with points increasing to 0.37 from 0.33 (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 $510,400) increased to 3.19 percent from 3.17 percent, with points unchanged at 0.28 (including 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 3.01 percent from 2.93 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 15-year fixed-rate mortgages increased to 2.48 percent from 2.39 percent, with points increasing to 0.33 from 0.31 (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 2.76 percent from 2.66 percent, with points decreasing to 0.31 from 0.38 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The ARM share of activity increased to 2.1 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.