Global| Feb 24 2021U.S. Mortgage Applications Decline as Interest Rates Continue to Increase
by:Tom Moeller
|in:Economy in Brief
Summary
• Purchase and refinancing loan applications fall. • Mortgage interest rates rise further. The Mortgage Bankers Association Mortgage Loan Applications Index declined 11.4% (+33.0% y/y) in the week ended February 19. It has declined in [...]
• Purchase and refinancing loan applications fall.
• Mortgage interest rates rise further.
The Mortgage Bankers Association Mortgage Loan Applications Index declined 11.4% (+33.0% y/y) in the week ended February 19. It has declined in five of the last six weeks. Applications for home purchase dropped 11.6% (+6.9% y/y), off for the fourth week in the last five. Applications for refinancing weakened 11.3% (+49.9% y/y) and also have been falling steadily since the middle of last month.
The refinance share of mortgage activity fell to 68.5% of total applications and has been falling for two months. The adjustable-rate mortgage (ARM) share of activity increased to 2.7% of total applications, up from 1.6% early last month.
Mortgage interest rates recently have been rising. The effective interest rate on a 30-year mortgage rose to 3.22%, up from its mid-December low of 2.95%. The effective 15-year rate rose ten basis points to 2.66%. The effective rate for a 30-year Jumbo mortgage jumped to 3.35% from 3.21%. The rate on a five-year ARM declined to 2.96% after increasing to 3.09% in the prior week.
The average mortgage loan size rose to $344,800 in the week ended February 19. The average size of a purchase loan rose to $418,000, a new series high dating back to January 1990. The average size of a refinanced loan increased to $311,100.
Applications for fixed-rate loans tumbled 11.7% (+24.0% y/y) to the lowest level since late-September. Applications for adjustable-rate mortgages fell 1.5% (-38.9% y/y) last 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) | 02/19/21 | 02/12/21 | 02/05/21 | Y/Y | 2020 | 2019 | 2018 |
|---|---|---|---|---|---|---|---|
| Total Market Index | -11.4 | -5.1 | -4.1 | 33.0 | 63.0 | 32.4 | -10.4 |
| Purchase | -11.6 | -6.1 | -4.7 | 6.9 | 11.4 | 6.6 | 2.1 |
| Refinancing | -11.3 | -4.7 | -4.2 | 49.9 | 111.0 | 71.1 | -24.3 |
| 30-Year Effective Mortgage Interest Rate (%) | 3.22 | 3.10 | 3.06 | 3.78
(Feb '20) |
3.40 | 4.34 | 4.94 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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