MBA Weekly Applications Survey May 26, 2021: Purchase Apps Up; Refis Down

Purchase applications rose, but a sharp drop in refinance applications led to an overall drop in mortgage applications last week, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending May 21. 

The Market Composite Index decreased by 4.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 4 percent compared to the previous week. 

The unadjusted Refinance Index decreased by 7 percent from the previous week and was 9 percent lower than the same week one year ago. The refinance share of mortgage activity decreased to 61.4 percent of total applications from 63.3 percent the previous week.

The seasonally adjusted Purchase Index increased by 2 percent from one week earlier. The unadjusted Purchase Index increased by 1 percent compared to the previous week but was 4 percent lower than the same week one year ago.

The FHA share of total applications decreased to 9.1 percent from 9.2 percent the week prior. The VA share of total applications decreased to 11.2 percent from 12.0 percent the week prior. The USDA share of total applications remained unchanged from 0.4 percent the week prior.

“Mortgage applications decreased last week as mortgage rates increased to 3.18 percent,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Refinances dropped 7 percent as a result, driven by declines in both conventional and government refinance activity. “Purchase applications increased for the second time in three weeks, rebounding after a rather weak April with mostly weekly declines.”

Kan noted while purchase activity was 4 percent lower than a year ago, the comparison is to last spring’s large upswing in activity as pandemic-related lockdowns lifted. “Demand is robust throughout the country, but homebuyers continue to be held back by the lack of homes for sale and rapidly increasing home prices,” he said.

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 3.18 percent from 3.15 percent, with points decreasing to 0.35 from 0.36 (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) decreased to 3.30 percent from 3.31 percent, with points increasing to 0.30 from 0.27 (including origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by FHA increased to 3.20 percent from 3.13 percent, with points decreasing to 0.25 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 2.53 percent from 2.54 percent, with points decreasing to 0.27 from 0.32 (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 2.81 percent from 2.58 percent, with points increasing to 0.29 from 0.25 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The ARM share of activity increased to 4.0 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.