MBA Weekly Applications Survey Aug. 18, 2021: Applications Down as Rates Crawl Above 3%

Mortgage applications fell by nearly 4 percent last week as interest rates crept above 3 percent for the first time in a month, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending August 13. 

The Market Composite Index decreased by 3.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 4 percent compared to the previous week. 

The unadjusted Refinance Index decreased by 5 percent from the previous week and was 8 percent lower than the same week one year ago. The refinance share of mortgage activity decreased to 67.3 percent of total applications from 68.0 percent the previous week.

The seasonally adjusted Purchase Index decreased by 1 percent from one week earlier. The unadjusted Purchase Index decreased by 2 percent compared to the previous week and was 19 percent lower than the same week one year ago.

The adjustable-rate mortgage (ARM) share of activity remained unchanged at 3.2 percent of total applications.

“Mortgage rates followed an overall increase in Treasury yields last week, which started higher from the strong July jobs report before slowing because of weaker consumer sentiment and concerns about rising COVID-19 cases,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “The increase in mortgage rates caused a 5 percent decrease in refinancing, driven by a 7 percent drop in conventional refinance applications. Even though rates are 7 basis points lower than the same week a year ago, the refinance index is around 8 percent lower. The eligible pool of homeowners who stand to benefit from a refinance is smaller now.”

Kan noted purchase applications also saw mixed results, with conventional purchase applications down and government purchases up. “Government purchase loans, such as FHA loans, are typically popular with first-time buyers,” he said. “Despite a second-straight weekly decrease, average loan sizes remain close to record highs. This is a continuing sign that sales prices are still elevated, driven by stiff competition leading to accelerating home-price growth.”

MBA reported the FHA share of total applications increased to 9.4 percent from 8.9 percent the week prior. The VA share of total applications increased to 10.3 percent from 9.6 percent the week prior. The USDA share of total applications decreased to 0.4 percent from 0.5 percent the week prior.

The report said the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 3.06 percent from 2.99 percent, with points increasing to 0.34 from 0.30 (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 3.19 percent from 3.15 percent, with points decreasing to 0.26 from 0.29 (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 3.15 percent from 3.06 percent, with points increasing to 0.31 from 0.27 (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 2.41 percent from 2.35 percent, with points increasing to 0.28 from 0.25 (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 2.90 percent from 2.52 percent, with points increasing to 0.23 from 0.15 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The ARM share of activity remained unchanged at 3.2 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.