MBA Weekly Applications Survey May 12, 2021: Back on Track

Mortgage applications rose for the first time in three weeks from one week earlier as interest rates dropped to three-month lows, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending May 7. 

The Market Composite Index increased by 2.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased by 2 percent compared to the previous week.

The unadjusted Refinance Index increased by 3 percent from the previous week but was 12 percent lower than the same week one year ago. The refinance share of mortgage activity increased to 61.3 percent of total applications from 61.0 percent the previous week.

The seasonally adjusted Purchase Index increased by 1 percent from one week earlier. The unadjusted Purchase Index increased by 1 percent compared to the previous week and was 13 percent higher than the same week one year ago.

The FHA share of total applications decreased to 9.9 percent from 10.1 percent the week prior. The VA share of total applications decreased to 11.7 percent from 11.9 percent the week prior. The USDA share of total applications increased to 0.5 percent from 0.4 percent the week prior.

“Mortgage rates fell last week to the lowest levels since February, tracking the dip in Treasury yields,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “The decline in rates helped the refinance index reach its highest level in eight weeks, driven by a 4 percent increase in conventional refinances. Additionally, refinance loan balances increased for the fourth straight week, an indication that higher-balance borrowers acted to take quick advantage of lower rates.

Kan noted the first week of May was also strong for the purchase market. “Applications were up 13 percent from a year ago, which was around the time the housing market awakened from the pandemic-induced stall in activity,” he said. “Most markets this spring continue to see robust demand, but activity continues to be constrained by insufficient inventory levels, as well as homebuilder challenges related to the ongoing shortages and price increases for building materials.”

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) decreased to 3.11 percent from 3.18 percent, with points decreasing to 0.32 from 0.34 (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 3.27 percent from 3.31 percent, with points increasing to 0.34 from 0.27 (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 3.07 percent from 3.13 percent, with points increasing to 0.34 from 0.22 (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 2.49 percent from 2.54 percent, with points decreasing to 0.29 from 0.31 (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 2.57 percent from 2.76 percent, with points decreasing to 0.22 from 0.23 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The ARM share of activity decreased to 3.8 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.