MBA Weekly Applications Survey Aug. 25, 2021: Purchases at Highest Level Since July

Mortgage applications increased from one week earlier as interest rates slid back toward 3 percent, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending August 20. 

The Market Composite Index increased by 1.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased by 1 percent from the previous week. 

The unadjusted Refinance Index increased by 1 percent from the previous week and was 3 percent higher than the same week one year ago. The refinance share of mortgage activity remained unchanged from the previous week at 67.3 percent of total applications.

The seasonally adjusted Purchase Index increased by 3 percent from one week earlier. The unadjusted Purchase Index increased by 1 percent from the previous week but was 16 percent lower than the same week one year ago.

“Treasury yields fell last week, as investors continue to anxiously monitor if the rise in COVID-19 cases in several states starts to dampen economic activity,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting.  “Mortgage rates slightly declined as a result, with the 30-year fixed rate decreasing for the first time in three weeks. Lower rates led to an increase in refinance applications, with government loan applications jumping 10 percent to the highest level since May 2021.”

Kan added purchase applications for both conventional and government loans also increased. “The purchase index was at its highest level since early July, despite still continuing to lag 2020’s pace,” he said. “There was also some easing in average loan sizes, which is potentially a sign that more first-time buyers looking for lower-priced homes are being helped by the recent uptick in for-sale inventory for both newly built homes and existing homes.”

The FHA share of total applications increased to 11 percent from 9.4 percent the week prior. The VA share of total applications decreased to 10 percent from 10.3 percent the week prior. The USDA share of total applications remained unchanged at 0.4 percent.

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) decreased to 3.03 percent from 3.06 percent, with points decreasing to 0.29 from 0.34 (including origination fee) for 80 percent loan-to-value ratio loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $548,250) decreased to 3.13 percent from 3.19 percent, with points increasing to 0.26 from 0.26 (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 3.10 percent from 3.15 percent, with points decreasing to 0.29 from 0.31 (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 2.38 percent from 2.41 percent, with points increasing to 0.29 from 0.28 (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 2.68 percent from 2.90 percent, with points increasing to 0.24 from 0.23 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The ARM share of activity decreased to 3.1 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.