MBA Weekly Applications Survey Oct. 13, 2021: Activity Edges Up; So Do Rates

Despite mortgage rates reaching their highest level in four months, mortgage applications increased last week, albeit slightly, the Mortgage Bankers Association reported Wednesday in its Weekly Mortgage Applications Survey for the week ending October 8. 

The Market Composite Index rose by 0.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased by 0.4 percent from the previous week. 

The unadjusted Refinance Index decreased by 1 percent from the previous week and was 16 percent lower than the same week one year ago. The refinance share of mortgage activity decreased to 63.9 percent of total applications from 64.5 percent the previous week.

The seasonally adjusted Purchase Index increased by 2 percent from one week earlier. The unadjusted Purchase Index increased 2 percent from the previous week and was 10 percent lower than the same week one year ago.

“Mortgage rates reached their highest level since June 2021, but application activity changed little this week. An increase in home purchase applications offset a slight decline in refinances,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “The increase in purchase applications was welcome news, but was primarily driven by a 2 percent gain in conventional purchase applications, which kept the average loan size elevated.”

Kan noted the 30-year fixed interest rate has risen 15 basis points over

the past month, resulting in an 11 percent drop in refinance applications during that time. “Government refinance applications fell over 3 percent last week, driven by a decline in FHA refinances and an 8-basis point increase in the average FHA mortgage rate,” he said. “We continue to expect weakening refinance activity as rates move higher and borrowers see less of a rate incentive.”

The FHA share of total applications decreased to 10.2 percent from 10.5 percent the week prior. The VA share of total applications decreased to 10.2 percent from 10.3 percent the week prior. The USDA share of total applications decreased to 0.4 percent from 0.5 percent the week prior.

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 3.14 percent, with points increasing to 0.37 from 0.35 (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 3.22 percent from 3.20 percent, with points increasing to 0.29 from 0.27 (including the 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 3.20 percent from 3.12 percent, with points unchanged at (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 2.48 percent from 2.45 percent, with points increasing to 0.29 from 0.24 (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 3.08 percent from 2.54 percent, with points increasing to 0.26 from 0.16 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The ARM share of activity remained unchanged at 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.