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Economy in Brief

U.S. Mortgage Applications Edge Up
by Sandy Batten  March 3, 2021

• Purchase loan applications rise; refinancing applications essentially unchanged.

• Mortgage interest rates rise further along with other market rates.

The Mortgage Bankers Association Mortgage Loan Applications Index edged up 0.5% w/w (5.4% y/y) in the week ended February 26, its first increase in four weeks. Applications had declined in five of the previous six weeks. Applications for home purchase rose 1.8% w/w (1.5% y/y) after having declined in four of the previous five weeks. Applications for refinancing were essentially unchanged from the previous week (+7.1% y/y) following declines in each of the three previous weeks.

The refinance share of mortgage activity fell for the fourth consecutive week to 67.5% of total applications from 68.5%. The adjustable-rate mortgage (ARM) share of activity increased for the fourth consecutive week to 2.9% of total applications, the highest percentage since last July, from 2.7%.

Mortgage interest rates rose further last week as financial markets appear to be expecting stronger economic growth and some higher inflation ahead. The effective interest rate on a 30-year mortgage jumped up 15 basis points to 3.37%, its highest level since last June, on top of a 12 basis points increase the previous week. It is up 42 basis points from its low last December. The effective 15-year rate rose eight basis points to 2.74%. The effective rate for a 30-year Jumbo mortgage increased 10 basis points to 3.45%. The rate on a five-year ARM rose nine basis points to 3.05%.

The average mortgage loan size fell 2.5% to $336,200 in the week ended February 26. The average size of a purchase loan slipped 1.4% w/w to $412,300 from a record $418,000 in the previous week. The average size of a refinanced loan fell 3.7% w/w to $299,600.

Applications for fixed-rate loans edged up 0.3% w/w (+9.3% y/y) last week. Applications for adjustable-rate mortgages jumped up 7.6% w/w (-52.4% y/y) last week.

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) 02/26/21 02/19/21 02/12/21 Y/Y 2020 2019 2018
Total Market Index 0.5 -11.4 -5.1 5.4 63.0 32.4 -10.4
  Purchase 1.8 -11.6 -6.1 1.5 11.4 6.6 2.1
  Refinancing 0.1 -11.3 -4.7 7.1 111.0 71.1 -24.3
30-Year Effective Mortgage Interest Rate (%) 3.37 3.22 3.10 3.78

(Feb '20)

3.40 4.34 4.94
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