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Economy in Brief

U.S. Mortgage Applications Jump Up in First Week of 2021
by Sandy Batten  January 13, 2021

• Increase led by surge in applications for refinancing.

• Mortgage interest rates little changed but still near or at record lows.

The Mortgage Bankers Association Mortgage Loan Applications Index jumped up 16.7% w/w (57.3% y/y) in the week ended January 8 after a 1.7% w/w gain in the previous week. Applications for purchase rose 8.0% w/w (11.5% y/y) following a 1.6% w/w decline in the previous week. Applications for refinance surged 20.1% w/w (92.5% y/y), their largest weekly gain since late March 2020, on top of a 3.0% w/w gain in the previous week. The refinance share of mortgage activity increased to 74.8% of total applications from 73.5% in the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 1.6% of total applications.

The expectation of additional fiscal stimulus from the incoming administration, and the rollout of vaccines improving the outlook, engendered expectations of higher mortgage rates to come and likely contributed to the surge in refinancing applications. However, in the most recent week, the effective interest rate on a 30-year mortgage only edged up to 2.97% from 2.96%, still just two basis points above its all-time low reached in the week of December 18, 2020. The 15-year rate was unchanged at its survey low of 2.47%. The survey began in January 1990. The effective rate for a Jumbo mortgage rose eight basis points to 3.25%. The rate on a five-year ARM edged up two basis points to 2.80%.

The average mortgage loan size fell 0.8% w/w to $320,300 in the week ended January 8 from $322,800 the previous week. The average size of a purchase loan slipped 1.0% w/w to $374,700 from $378,500 in the previous week. The average size of a refinanced loan edged down 0.3% w/w to $302,000 from $302,800.

Applications for fixed-rate loans jumped up 16.8% w/w (+62.1% y/y) and applications for adjustable-rate mortgages increased 10.9% w/w (-43.6% y/y).

This survey covers over 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver's SURVEYW database.

MBA Mortgage Applications (%, SA) 01/08/21 01/01/21 12/25/20 Y/Y 2020 2019 2018
Total Market Index 16.7 1.7 -5.8 57.3 63.0 32.4 -10.4
  Purchase 8.0 -1.6 0.8 11.5 11.4 6.6 2.1
  Refinancing 20.1 3.0 -8.8 92.5 111.0 71.1 -24.3
30-Year Effective Mortgage Interest Rate (%) 2.97 2.96 2.99 3.92

(Jan '20)

3.40 4.34 4.94
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