MBA Weekly Applications Survey May 19, 2021: Refis Drive 2nd Straight Increase

Consumers got on the refinance bus last week, driving mortgage applications up for the second consecutive week, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending May 14.

The Market Composite Index increased by 1.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased by 1 percent compared to the previous week.

The unadjusted Refinance Index increased by 4 percent from the previous week but was 2 percent lower than the same week one year ago. The refinance share of mortgage activity increased to 63.3 percent of total applications from 61.3 percent the previous week.

The seasonally adjusted Purchase Index decreased by 4 percent from one week earlier. The unadjusted Purchase Index decreased by 4 percent compared to the previous week and was 2 percent higher than the same week one year ago.

The FHA share of total applications decreased to 9.2 percent from 9.9 percent the week prior. The VA share of total applications increased to 12.0 percent from 11.7 percent the week prior. The USDA share of total applications decreased to 0.4 percent from 0.5 percent the week prior.

“Mortgage rates increased last week, with all loan types hitting their highest levels in two weeks. Rates  were still lower than levels reported in late March and early April, providing additional opportunity for borrowers to refinance,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Despite the 30-year fixed rate rising to 3.15 percent, applications for conventional and VA refinances increased. Ongoing volatility in refinance applications is likely if rates continue to oscillate around current levels.”

Kan noted declines in purchase applications for both conventional and government loans. “There continues to be strong demand for buying a home, but persistent supply shortages are constraining purchase activity, and building material shortages and higher costs are making it more difficult to increase supply,” he said. “As a result, home prices and average purchase loan balances continue to rise, with the average purchase application reaching $411,400 – the highest since February.”

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 3.15 percent from 3.11 percent, with points increasing to 0.36 from 0.32 (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 3.31 percent from 3.27 percent, with points decreasing to 0.27 from 0.34 (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 3.13 percent from 3.07 percent, with points decreasing to 0.30 from 0.34 (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 2.54 percent from 2.49 percent, with points increasing to 0.32 from 0.29 (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 2.58 percent from 2.57 percent, with points increasing to 0.25 from 0.22 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The ARM share of activity increased to 3.9 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.