MBA Weekly Survey Mar. 31, 2021: Applications Drop 3rd Straight Week

Despite a slight decrease in mortgage interest rates—the first such decline in nearly two months—mortgage applications fell for the third straight week, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending March 26.

The 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 3 percent from the previous week and was 32 percent lower than the same week one year ago. The refinance share of mortgage activity decreased to 60.6 percent of total applications from 60.9 percent the previous week.

Even purchase applications, which had shown resilience in the wake of rising interest rates, fell last week. The seasonally adjusted Purchase Index decreased by 2 percent from one week earlier. The unadjusted Purchase Index decreased by 1 percent compared to the previous week but was 39 percent higher than the same week one year ago.

The FHA share of total applications decreased to 11.3 percent from 11.7 percent the week prior. The VA share of total applications increased to 10.3 percent from 9.8 percent the week prior. The USDA share of total applications remained unchanged from 0.4 percent the week prior.

“After seven consecutive weeks of increasing mortgage rates, the 30-year fixed rate declined 3 basis points to 3.33 percent, which is still almost half a percentage point higher than the start of this year,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Mortgage applications for refinances and home purchases both declined, but purchase activity was still convincingly higher than the pandemic-induced drop seen a year ago, as well as up 6 percent from the same week in March 2019.”

Kan said many prospective homebuyers this spring are feeling the effects of higher rates and rapidly accelerating home prices. “Record-low inventory is pushing home-price growth at double the rate from a year ago, and even above the 10 percent growth rates seen in 2005,” he said. “The housing market is in desperate need of more inventory to cool price growth and preserve affordability. Higher mortgage rates continue to shut down refinance activity, as the pool of borrowers who can benefit from a refinance further shrinks.”

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) decreased to 3.33 percent from 3.36 percent, with points decreasing to 0.39 from 0.42 (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 3.34 percent from 3.40 percent, with points decreasing to 0.31 from 0.43 (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 3.29 percent from 3.35 percent, with points decreasing to 0.34 from 0.41 (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 2.71 percent from 2.72 percent, with points decreasing to 0.33 from 0.40 (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 increased to 2.85 percent from 2.79 percent, with points decreasing to 0.40 from 0.44 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The ARM share of activity increased to 3.4 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.