MBA Weekly Applications Survey July 7, 2021: Apps Dip Again to Pre-Pandemic Low

Mortgage applications fell again last week, the Mortgage Bankers Association reported Wednesday—not as sharply as they did the previous week, but enough to their lowest level since before the coronavirus pandemic.

In the MBA Weekly Mortgage Applications Survey for the week ending July 2, the Market Composite Index decreased by 1.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 2 percent compared to the previous week. That was enough for application activity to reach the lowest level since the beginning of 2020.

The unadjusted Refinance Index decreased by 2 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 61.6 percent of total applications from 61.9 percent the previous week.

The seasonally adjusted Purchase Index decreased by 1 percent from one week earlier. The unadjusted Purchase Index decreased by 1 percent compared to the previous week and was 14 percent lower than the same week one year ago.

The FHA share of total applications increased to 9.8 percent from 9.5 percent the week prior. The VA share of total applications increased to 10.8 percent from 10.5 percent the week prior. The USDA share of total applications remained unchanged from 0.5 percent the week prior.

“Even as mortgage rates declined, with the 30-year fixed rate dropping 5 basis points to 3.15 percent, both purchase and refinance applications decreased,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Treasury yields have been volatile despite mostly positive economic news, including last week’s June jobs report, which showed ongoing improvements in the labor market. However, rates continued to move lower – especially late in the week. The 30-year fixed rate was 11 basis points lower than the same week a year ago, but many borrowers previously refinanced at even lower rates. Refinance applications have trended lower than 2020 levels for the past four months.”

Kan added swift home-price growth across much of the country, “driven by insufficient housing supply, is weighing on the purchase market and is pushing average loan amounts higher.”

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) decreased to 3.15 percent from 3.20 percent, with points decreasing to 0.38 from 0.39 (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 3.20 percent from 3.23 percent, with points decreasing to 0.28 from 0.33 (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 3.17 percent from 3.19 percent, with points decreasing to 0.32 from 0.34 (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 2.52 percent from 2.56 percent, with points decreasing to 0.23 from 0.37 (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 2.94 percent from 2.98 percent, with points increasing to 0.34 from 0.23 (including origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.

The ARM share of activity decreased to 3.3 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.