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Economy in Brief

U.S. Mortgage Applications Decrease Modestly; Rates Change Little
by Carol Stone, CBE  August 4, 2021

• Applications decrease for both purchase and refinance.

• Fixed-rate and adjustable-rate applications both slow after prior week's advances.

• Average loan size also slows for all major loan types.

The Mortgage Bankers Association's Loan Applications Index fell 1.7% (-8.1% y/y) in the week ended July 30, following a 7.0% increase the prior week. Applications for purchase and for refinancing both also decreased 1.7% in the latest week, with purchase applications down 17.7% from a year ago and those for refinancing down 3.2% on the year.

The share of applications for refinancing rose to 67.6% of total applications in the week ended July 30, up marginally from 67.5% the week prior. The latest was the largest share since the February 19 week's 68.5%. The adjustable-rate mortgage (ARM) share of activity edged down to 3.4% from 3.5% the prior week.

The effective interest rate on a 30-year mortgage fell to 3.07% last week from 3.11% in the week prior; it was the lowest since the first week of February. The average contract rate on 30-year loans was 2.97% in the July 30 week, the first time that was below 3% since the February 12 week. The effective 15-year rate was 2.39% in the latest week, down from 2.44% the week before; the latest was yet another new low for this series, which dates back to January 5, 1990. The effective rate for a 30-year Jumbo mortgage loan was 3.20%, and that for a 5-year adjustable rate loan was 3.00%.

Applications for fixed-rate loans fell 1.6% (-8.7% y/y) in the week ended July 30, following a 6.7% advance in the prior week. Applications for adjustable-rate mortgages fell 4.2% (+1.1% y/y) after surging 15.4% in the week ended July 23.

The average size of mortgage loans decreased 3.2% (+5.8% y/y) to $345,300 in the week ended July 30. The size of loans to purchase fell 2.6% (7.5% y/y) to $394,100. The size of refinanced loans decreased 3.5% (6.0% y/y) to $321,900.

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) 07/30/21 07/23/21 07/16/21 Y/Y 2020 2019 2018
Total Market Index -1.7 7.0 -4.0 -8.1 63.0 32.4 -10.4
  Purchase -1.7 -1.5 -6.4 -17.7 11.4 6.6 2.1
  Refinancing -1.7 11.2 -2.8 -3.2 111.0 71.1 -24.3
30-Year Effective Mortgage Interest Rate (%) 3.07 3.11 3.23 3.30

(Jul '20)

3.40 4.34 4.94
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