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Economy in Brief

U.S. Mortgage Applications Increase as Interest Rates Slip
by Tom Moeller  August 25, 2021

• Home purchase and refinancing applications move higher.

• Fixed-rate loans rise while ARM loans fall.

• Loan sizes fall.

The Mortgage Bankers Association's Loan Applications Index increased 1.6% (-4.4% y/y) in the week ended August 20 following a 3.9% decline in the prior week. Applications for purchase rose 3.0% (-16.4% y/y) after a 0.8% slip. Applications for refinancing improved 0.9% (2.9% y/y) after falling 5.3% in the prior week.

The share of applications for refinancing held steady at 67.3% of the total last week. It remained up from 59.2% early in April. The adjustable-rate mortgage (ARM) share of activity eased to 3.1% and has been trending lower since 4.0% in mid-May.

The effective interest rate on a 30-year mortgage eased to 3.11% last week after rising to 3.16% in the previous week. The effective 15-year rate slipped to 2.45% from 2.48%. The effective rate for a 30-year Jumbo mortgage loan fell six basis points to 3.21%. The rate on a 5-year adjustable rate dropped to 2.77% after rising to 2.98% in the previous week. The series dates back only to January 2011.

Applications for fixed-rate loans rose 1.8% (-4.8% y/y) in the week ended August 20 following a 4.0% decline in the prior week. Applications for adjustable-rate mortgages dropped 4.3% (+11.3% y/y), the fourth straight weekly decline.

The average size of mortgage loans fell to $333,300 last week from $339,200 in the previous week. The size of loans to purchase slipped to $392,400. The size of refinanced loans declined to $304,600.

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) 08/20/21 08/13/21 08/06/21 Y/Y 2020 2019 2018
Total Market Index 1.6 -3.9 2.8 -4.4 63.0 32.4 -10.4
  Purchase 3.0 -0.8 1.8 -16.4 11.4 6.6 2.1
  Refinancing 0.9 -5.3 3.2 2.9 111.0 71.1 -24.3
30-Year Effective Mortgage Interest Rate (%) 3.11 3.16 3.08 3.20

(Aug '20)

3.40 4.34 4.94
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