MBA Weekly Applications Survey Sept. 29, 2021: Higher Treasury Yields Push Rates Up; Applications Down

Mortgage applications fell last week as mortgage rates reached their highest level since July, the Mortgage Bankers Association reported Tuesday in its Weekly Mortgage Applications Survey for the week ending September 24. 

The Market Composite Index decreased by 1.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by1 percent from the previous week.

The unadjusted Refinance Index decreased by 1 percent from the previous week but was 0.4 percent higher than the same week one year ago. The refinance share of mortgage activity increased to 66.4 percent of total applications from 66.2 percent the previous week.

The seasonally adjusted Purchase Index decreased by 1 percent from one week earlier. The unadjusted Purchase Index decreased by 2 percent from the previous week and was 12 percent lower than the same week one year ago.

The FHA share of total applications decreased to 10.4 percent from 11.5 percent the week prior. The VA share of total applications decreased to 10.2 percent from 10.4 percent the week prior. The USDA share of total applications decreased to 0.4 percent from 0.5 percent the week prior.

“Increased optimism about the strength of the economy pushed Treasury yields higher following last week’s Federal Open Market Committee meeting,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Mortgage rates in response rose across all loan types, with the benchmark 30-year fixed rate reaching its highest level since early July.”

Kan said the increase in rates – mostly later in the week – led to a decrease in both purchase and refinance applications, with a prominent decline in government loan applications. Conventional loan applications increased, driven by a rise in conventional refinances.

“This was perhaps a sign that some borrowers reacted to higher rates and decided to refinance,” Kan said. “With home-price appreciation continuing to run hot, increasing more than 19 percent annually in July, applications for larger loan amounts continue to outpace lower-balance loans. The average loan size for a purchase application reached $410,000, its highest level since May.”

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 3.10 percent from 3.03 percent, with points increasing to 0.34 from 0.30 (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 3.14 percent from 3.11 percent, with points increasing to 0.33 from 0.25 (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 3.09 percent from 3.07 percent, with points remaining unchanged at 0.25 (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 2.43 percent from 2.34 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 2.77 percent from 2.51 percent, with points increasing to 0.16 from 0.12 (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.