Mortgage Applications Down Again in MBA Weekly Survey

Mortgage applications fell for the second straight week as the 30-year fixed rate crept up, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending January 22. 

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

The unadjusted Refinance Index decreased 5 percent from the previous week but was 83 percent higher than the same week one year ago. The refinance share of mortgage activity decreased to 70.7 percent of total applications from 72.3 percent the previous week.

The seasonally adjusted Purchase Index decreased 4 percent from one week earlier. The unadjusted Purchase Index increased 3 percent compared to the previous week and was 16 percent higher than the same week one year ago.

“In a sign that borrowers are increasingly more sensitive to higher rates, large declines in government purchase applications and refinance applications pulled overall activity lower,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “The refinance index has now declined for two straight weeks, but is still 83 percent higher than last year. Purchase applications also decreased last week, but the impressive trend of year-over-year growth since the second half of 2020 has continued in early 2021. Activity was up 16 percent from a year ago, and the average purchase loan amount hit another record high of $395,200.”

Kan noted since hitting a recent low in April 2020, the average purchase loan amount has steadily risen “in line with the accelerating home-price appreciation occurring in most of the country because of strong demand and extremely low inventory levels.”

MBA reported the FHA share of total applications increased to 9.4 percent from 9.3 percent the week prior. The VA share of total applications decreased to 12.4 percent from 13.8 percent the week prior. The USDA share of total applications increased to 0.5 percent from 0.4 percent the week prior.

The report said the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) increased to 2.95 percent from 2.92 percent, with points decreasing to 0.32 from 0.37 (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) decreased to 3.17 percent from 3.19 percent, with points increasing to 0.31 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 2.88 percent from 3.01 percent, with points increasing to 0.34 from 0.29 (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 2.43 percent from 2.48 percent, with points decreasing to 0.32 from 0.33 (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 decreased to 2.60 percent from 2.76 percent, with points increasing to 0.38 from 0.31 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The ARM share of activity increased to 2.2 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.