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MBA: Mortgage Applications Decrease in Latest Weekly Survey

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by Calculated Risk on 8/18/2021 07:00:00 AM

From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey

Mortgage applications decreased 3.9 percent from one
week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage
Applications Survey for the week ending August 13, 2021.

… The Refinance Index decreased 5 percent from the previous
week and was 8 percent lower than the same week one year ago. The seasonally adjusted Purchase
Index decreased 1 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent
compared with the previous week and was 19 percent lower than the same week one year ago.

“Mortgage rates were at their highest levels in around a month, with the 30-year fixed rate increasing
above 3 percent to 3.06 percent. Mortgage rates followed an overall increase in Treasury yields last
week, which started higher from the strong July jobs report before slowing because of weaker consumer
sentiment and concerns about rising COVID-19 cases,” said Joel Kan, MBA’s Associate Vice President of
Economic and Industry Forecasting. “The increase in mortgage rates caused a 5 percent decrease in
refinancing, driven by a 7 percent drop in conventional refinance applications. Even though rates are 7
basis points lower than the same week a year ago, the refinance index is around 8 percent lower. The
eligible pool of homeowners who stand to benefit from a refinance is smaller now.”

Added Kan, “Purchase applications also saw a mixed results, with conventional purchase applications
down and government purchases up. Government purchase loans, such as FHA loans, are typically
popular with first-time buyers. Despite a second-straight weekly decrease, average loan sizes remain
close to record highs. This is a continuing sign that sales prices are still elevated, driven by stiff
competition leading to accelerating home-price growth.”

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances
($548,250 or less) increased to 3.06 percent from 2.99 percent, with points increasing to 0.34 from 0.30
(including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added

Click on graph for larger image.

The first graph shows the refinance index since 1990.

With low rates, the index remains elevated.

The second graph shows the MBA mortgage purchase index

According to the MBA, purchase activity is down 19% year-over-year unadjusted.

Note: The year ago comparisons for the unadjusted purchase index are now difficult since purchase activity picked up in late May 2020.

Note: Red is a four-week average (blue is weekly).

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