MBA Weekly Applications Survey June 2, 2021: Index at 15-Month Low

Mortgage applications fell again last week, hamstrung by lack of housing inventory and rising prices, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending May 28.

(This week’s year-over-year results are being compared to the week of Memorial Day 2020.) 

The Market Composite Index fell by 4 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index fell by 5 percent compared to the previous week. The Market Composite Index is at its lowest level since February 2020.

The unadjusted Refinance Index decreased by 5 percent from the previous week but was 6 percent higher than the same week one year ago. The refinance share of mortgage activity decreased to 61.3 percent of total applications from 61.4 percent the previous week.

The seasonally adjusted Purchase Index decreased by 3 percent from one week earlier. The unadjusted Purchase Index decreased by 5 percent compared to the previous week and was 2 percent lower than the same week one year ago.

The FHA share of total applications increased to 9.6 percent from 9.1 percent the week prior. The VA share of total applications decreased to 10.9 percent from 11.2 percent the week prior. The USDA share of total applications remained unchanged from 0.4 percent the week prior.

“Tight housing inventory, obstacles to a faster rate of new construction and rapidly rising home prices continue to hold back purchase activity,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “ The government purchase index declined to its lowest level in over a year and has now decreased year-over-year for five straight weeks. Purchase applications were down almost 2 percent from a year ago, but that was compared to the week of Memorial Day 2020.”

Kan noted refinance activity also dropped for the second straight week, even as the 30-year fixed rate decreased slightly to 3.17 percent. “Even though rates have been below 3.20 percent over the past month, they are still around 20-30 basis points higher than the record lows in late 2020,” he said.

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) decreased to 3.17 percent from 3.18 percent, with points increasing to 0.39 from 0.35 (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 3.34 percent from 3.30 percent, with points increasing to 0.38 from 0.30 (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 decreased to 3.16 percent from 3.20 percent, with points increasing to 0.31 from 0.25 (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 increased to 2.56 percent from 2.53 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 5/1 adjustable-rate mortgages decreased to 2.54 percent from 2.81 percent, with points unchanged at 0.29 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The ARM share of activity decreased to 3.7 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.