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Economy in Brief

U.S. Mortgage Applications Decline as Interest Rates Rise
by Tom Moeller  September 29, 2021

• Applications for purchase & refinancing fall.

• Mortgage rates rise to two-month high.

• Purchase loan size surges.

The Mortgage Bankers Association's Loan Applications Index fell 1.1% (-4.5% y/y) in the week ended September 24 following a 4.9% gain during the prior week. Mortgage applications to purchase a home declined 1.2% (-12.6% y/y) after rising 2.2% in the week prior. Refinancing applications fell 0.9% last week (+0.4% y/y) following a 6.5% rise one week earlier.

The share of applications for refinancing rose to 66.4% in the week of September 24 from 66.2% the week before. The adjustable-rate mortgage (ARM) share of activity rose to 3.4% and made up the prior week's decline to 2.9%.

The effective interest rate on a 30-year mortgage increased to 3.20% in the week ended September 24. It was the highest level since the third week of July. The effective 15-year rate rose to 2.50%, also a two-month high. The effective rate for a 30-year Jumbo mortgage loan was 3.24%, after the prior week's 3.18%. For 5-year adjustable-rate loans, the effective rate rose to 2.83% from the all-time low of 2.55% in the prior week. These last two series date back only to January 2011, while the others begin in January 1990.

Applications for fixed-rate loans fell 1.5% (-5.7% y/y) in the week ended September 24, following a 5.3% rise the week before. Applications for adjustable-rate mortgages surged 15.7% (46.8% y/y) after falling 6.4% in the prior week.

The average size of mortgage loans was $344,500 in the week of September 24, the highest level since early-August. The average size of loans for purchase of $410,300 was the highest level since second week of May. The average size of refinance loans rose to $311,200 in the latest week from $301,000 the week before.

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) 09/24/21 09/17/21 09/10/21 Y/Y 2020 2019 2018
Total Market Index -1.1 4.9 0.3 -4.5 63.0 32.4 -10.4
  Purchase -1.2 2.2 7.5 -12.6 11.4 6.6 2.1
  Refinancing -0.9 6.5 -3.2 0.4 111.0 71.1 -24.3
30-Year Effective Mortgage Interest Rate (%) 3.20 3.11 3.12 3.19

(Sep '20)

3.40 4.34 4.94
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