Mortgage Applications Decrease in MBA Weekly Survey for Feb. 17

MBA NewsLink Staff

Interest rates hit their highest level since November, and mortgage applications dropped, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending February 12. 

The Market Composite Index decreased by 5.1 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 but was 51 percent higher than the same week one year ago. The refinance share of mortgage activity decreased to 69.3 percent of total applications from 70.2 percent the previous week.

The seasonally adjusted Purchase Index decreased by 6 percent from one week earlier. The unadjusted Purchase Index decreased by 1 percent compared to the previous week but was 15 percent higher than the same week one year ago.

“Expectations of faster economic growth and inflation continue to push Treasury yields and mortgage rates higher. Since hitting a survey low in December, the 30-year fixed rate has slowly risen, and last week climbed to its highest level since November,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “The uptick in rates has slightly dampened refinance activity, with MBA’s index falling for the second week in a row, and the overall share dipping below 70 percent for the first time since last October.”

Kan said the early 2021 housing market continues to be constrained by low inventory and higher prices. “Conventional and government applications to buy a home declined last week, but purchase activity overall is still strong – up 15 percent from last year,” he said. “The average purchase loan size hit another survey high at $412,200, partly due to a larger drop in FHA applications, which tend to have smaller-than-average loan sizes.”

MBA reported the FHA share of total applications decreased to 9.0 percent from 9.5 percent the week prior. The VA share of total applications decreased to 13.2 percent from 13.3 percent the week prior. The USDA share of total applications remained unchanged 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 ($548,250 or less) increased to 2.98 percent from 2.96 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) remained unchanged at 3.11 percent, with points increasing to 0.35 from 0.29 (including the 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 decreased to 2.93 percent from 2.97 percent, with points increasing to 0.37 from 0.36 (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 2.47 percent from 2.50 percent, with points increasing to 0.36 from 0.29 (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 2.83 percent from 2.92 percent, with points increasing to 0.7 from 0.36 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The ARM share of activity increased to 2.4 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.