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Economy in Brief

U.S. Mortgage Applications Rebound on Lower Effective Rates
by Kathleen Stephansen  July 14, 2021

• Applications for both purchase and refinance rebound.

• Rates on fixed-rate mortgages edge down; rates on adjustable-rate loans edge up.

• Average size for mortgage loans rose pushed by a jump in those to refinance.

The Mortgage Bankers Association's Loan Applications Index rebounded 16.0% w/w (-10.8% y/y) in the week ended July 9, following a decline of 1.8% the week before. This latest week index reached 727.5 (March 16, 1990 = 100).

Applications to purchase a home rose 8.3% w/w (-10.5% y/y) in the July 9 week, after a 1.1% w/w decline the prior week. Applications for refinancing rose 20.4% w/w (-10.9% y/y) following a 2.3% w/w decline in the week ended July 2. The share of applications for refinancing rebounded to 64.1% of total applications in the week ended July 9, up from 61.6% the week prior. That share is the highest since March 5, 2021. The adjustable-rate mortgage (ARM) share of activity rose to 3.5% from 3.3% the prior week.

The effective interest rate on a 30-year mortgage fell to 3.20% in the latest week from 3.26% the week prior. The series' low was 2.95% in the weeks of December 11 and 18, 2020. The recent high was 3.48% the week of April 2, 2021. The effective 15-year rate was 2.56% in the week ended July 9, slightly down from 2.58% the week prior. The effective rate for a 30-year Jumbo mortgage rate was 3.23% in the latest week, down from 3.28%, while the rate of a 5-year ARM rose from 3.07% in the week ended July 2 to 3.13% in the week ended July 9.

Applications for fixed-rate loans rose 15.8% w/w (-11.2% y/y) in the week ended July 9, following a 1.5% weekly decline the prior week and bringing the index to 737.3 from 636.6. Applications for adjustable-rate mortgages rose 22.4% (3.9% y/y) after a decline of 10.8% in the week ended July 2.

The average size of mortgage loans rose 3.1% w/w to $345,900 in the week ended July 9. The size of loans to purchase dropped 1.7% w/w to $398,600 whereas the size of refinance loans jumped 8.4% to $316,300.

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.

The Fed's latest Beige Book covering regional economic conditions is available here.

MBA Mortgage Applications (%, SA) 07/09/21 07/02/21 06/25/21 Y/Y 2020 2019 2018
Total Market Index 16.0 -1.8 -6.9 -10.8 63.0 32.4 -10.4
  Purchase 8.3 -1.1 -4.8 -10.5 11.4 6.6 2.1
  Refinancing 20.4 -2.3 -8.2 -10.9 111.0 71.1 -24.3
30-Year Effective Mortgage Interest Rate (%) 3.20 3.26 3.32 3.30

(Jul '20)

3.40 4.34 4.94
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