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Economy in Brief

U.S. Mortgage Applications Decrease Slightly as Rates Rise Slightly
by Carol Stone, CBE  September 1, 2021

• Loans to purchase a house increase, while refinance loans decrease.

• Fixed-rate loans decrease while ARM loans rise.

• Loan sizes increase for both purchase and refinancing.

The Mortgage Bankers Association's Loan Applications Index fell 2.4% (-4.7% y/y) in the week ended August 27 following a 1.6% advance the prior week. Applications for purchase rose 0.6% (-16.3% y/y) after a gain of 3.0%. Applications for refinancing dropped 3.8% (2.1% y/y) after increasing 0.9% in the prior week.

The share of applications for refinancing edged down to 66.8% in the August 27 week from 67.3% the prior week. The adjustable-rate mortgage (ARM) share of activity ticked upward to 3.2% from the prior week's 3.1%; its recent high was 4.0% in mid-May.

The effective interest rate on a 30-year mortgage rose to 3.13% last week after easing to 3.11% in the previous week. The effective 15-year rate also rose 2 basis points, to 2.47% from 2.45% The effective rate for a 30-year Jumbo mortgage loan was unchanged at 3.21%. The rate on a 5-year adjustable-rate loan rose to 2.85% from the prior week's 2.77%. The series dates back only to January 2011.

Applications for fixed-rate loans declined 2.5% (-5.3% y/y) in the week ended August 27 following a 1.8% increase the week before. Applications for adjustable-rate mortgages increased 2.3% (+15.5% y/y), the first weekly increase since July 23.

The average size of mortgage loans was $335,900 last week, up from $333,300 the week before. The size of loans to purchase rose to $396,500 from $392,400, while the average size of refinance loans edged up to $305,800 from $304,600 in the August 20 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) 08/27/21 08/20/21 08/13/21 Y/Y 2020 2019 2018
Total Market Index -2.4 1.6 -3.9 -4.7 63.0 32.4 -10.4
  Purchase 0.6 3.0 -0.8 -16.3 11.4 6.6 2.1
  Refinancing -3.8 0.9 -5.3 2.1 111.0 71.1 -24.3
30-Year Effective Mortgage Interest Rate (%) 3.13 3.11 3.16 3.20

(Aug '20)

3.40 4.34 4.94
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