MBA Weekly Applications Survey Mar. 10, 2021: Rising Rates Send Applications Down

Mortgage applications fell by 1.3 percent from one week earlier as key mortgage rates jumped to their highest rate since last July, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending March 5. 

The Market Composite Index decreased by 1.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 1 percent compared to the previous week. 

The unadjusted Refinance Index decreased by 5 percent from the previous week and was 43 percent lower than the same week one year ago. The refinance share of mortgage activity decreased to 64.5 percent of total applications from 67.5 percent the previous week.

The seasonally adjusted Purchase Index increased by 7 percent from one week earlier. The unadjusted Purchase Index increased by 9 percent compared to the previous week and was 2 percent higher than the same week one year ago.

“The 30-year fixed mortgage rate climbed to 3.26 percent last week, which is the highest since last July and up 40 basis points since the start of 2021,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Signs of faster economic growth, an improving job market  and increased vaccine distribution are pushing rates higher.”

Kan said the run-up in mortgage rates continues to cool demand for refinance applications. “Activity declined last week for the fourth time in five weeks,” he said. “With the spring buying season at the doorstep, the purchase market had its strongest showing in four weeks, with gains in both conventional and government applications. Overall activity was 2.4 percent higher than a year ago, and loan sizes moderated for the second straight week – potentially a sign that more first-time buyers are entering the market.”

MBA reported the FHA share of total applications decreased to 11.6 percent from 12.1 percent the week prior. The VA share of total applications decreased to 11.1 percent from 12.3 percent the week prior. The USDA share of total applications remained unchanged from 0.4 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 3.26 percent from 3.23 percent, with points decreasing to 0.43 from 0.48 (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 3.33 percent, with points increasing to 0.50 from 0.41 (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 3.20 percent from 3.19 percent, with points increasing to 0.37 from 0.30 (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 decreased to 2.63 percent from 2.64 percent, with points decreasing to 0.37 from 0.39 (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 2.69 percent from 2.84 percent, with points decreasing to 0.37 from 0.58 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The ARM share of activity increased to 3.0 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.