MBA Weekly Applications Survey Mar. 17, 2021: Steady Rise in Rates Dampens Activity

Mortgage interest rates continued their slow but steady rise—reaching a nine-month high—putting a damper on refinance applications, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending March 12. 

The overall Market Composite Index decreased by 2.2 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. 

The unadjusted Refinance Index decreased by 4 percent from the previous week to a six-month low and was 39 percent lower than the same week one year ago. The refinance share of mortgage activity decreased to 62.9 percent of total applications from 64.5 percent the previous week.

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

The FHA share of total applications increased to 11.7 percent from 11.6 percent the week prior. The VA share of total applications decreased to 10.3 percent from 11.1 percent the week prior. The USDA share of total applications remained unchanged from 0.4 percent the week prior.

“Mortgage application activity was mixed last week, as the run-up in rates continues to reduce incentives for potential refinance borrowers,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “The 30-year fixed rate increased to its highest level since June 2020, and all other surveyed rates were either flat or increased.”

Kan noted after reaching a recent high in the last week of January, the Refinance Index has since fallen 26 percent to its lowest level since September 2020. “Rates have jumped 36 basis points since the end of January, and last week refinance activity fell across all loan types,” he said. “The purchase market helped offset the slump in refinances. Activity was up 5 percent from a year ago, as the recovering job market and demographic factors drive demand, despite ongoing supply and affordability constraints.”

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 3.28 percent from 3.26 percent, with points decreasing to 0.41 from 0.43 (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 3.34 percent, with points decreasing to 0.40 from 0.50 (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 increased to 3.25 percent from 3.20 percent, with points increasing to 0.38 from 0.37 (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 2.67 percent from 2.63 percent, with points remaining unchanged at 0.37 (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 increased to 2.82 percent from 2.69 percent, with points decreasing to 0.30 from 0.37 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The ARM share of activity decreased to 2.7 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.