MBA Weekly Applications Survey Dec. 1, 2021: Refis Take a Hit as Rates Reach 8-Month High

Despite a steady increase in purchase applications, overall mortgage application activity got swamped by a sharp drop in refinance applications as interest rates spiked to their highest rate since April, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending November 26. 

This week’s results include an adjustment for the Thanksgiving holiday.

The Market Composite Index decreased by 7.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 37 percent from the previous week.  

The unadjusted Refinance Index decreased by 15 percent from the previous week and was 41 percent lower than the same week one year ago. The refinance share of mortgage activity decreased to 59.4 percent of total applications from 63.1 percent the previous week.

The seasonally adjusted Purchase Index increased by 5 percent from one week earlier. The unadjusted Purchase Index decreased by 30 percent from the previous week and was 8 percent lower than the same week one year ago.

The FHA share of total applications increased to 8.9 percent from 8.6 percent the week prior. The VA share of total applications decreased to 10.0 percent from 10.3 percent the week prior. The USDA share of total applications increased to 0.5 percent from 0.4 percent the week prior.

“Mortgage rates rose for the third week in a row, reducing the refinance incentive for many borrowers,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Over the past three weeks, rates are up 15 basis points and refinance activity has declined over 18 percent. Despite higher mortgage rates, purchase applications had a strong week, mostly driven by a 6 percent increase in conventional loan applications. Conventional loans tend to be larger than government loans, and this was evident in the average loan amount, which increased to $414,700 –the highest since February 2021. As home-price appreciation continues at a double-digit pace, buyers of newer, pricier homes continue to dominate purchase activity, while the share of first-time buyer activity remains depressed.”

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 3.31 percent from 3.24 percent, with points increasing to 0.43 from 0.36 (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 3.27 percent from 3.28 percent, with points increasing to 0.35 from 0.26 (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 3.42 percent from 3.27 percent, with points increasing to 0.35 from 0.34 (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 2.63 percent from 2.59 percent, with points decreasing to 0.31 from 0.34 (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 decreased to 2.48 percent from 3.00 percent, with points decreasing to 0.27 from 0.32 (including origination fee) for 80 percent LTV loans.  The effective rate decreased from last week.

The ARM share of activity increased to 3.6 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.