Global| Mar 10 2021U.S. Mortgage Applications Decline, Paced by Fewer Refinancings
by:Tom Moeller
|in:Economy in Brief
Summary
• Refinancing applications decline as mortgage interest rates move higher. • Purchase applications continue to strengthen. The Mortgage Bankers Association Mortgage Loan Applications Index declined 1.3% (-32.3% y/y) in the week ended [...]
• Refinancing applications decline as mortgage interest rates move higher.
• Purchase applications continue to strengthen.
The Mortgage Bankers Association Mortgage Loan Applications Index declined 1.3% (-32.3% y/y) in the week ended March 5, its fourth decline in five weeks. Applications for refinancing declined 5.0% (-43.0% y/y). They have been declining since their late-January peak. Applications to purchase a home rose 7.2% (2.4% y/y) after declining through most of February.
The refinance share of mortgage activity fell for the fifth consecutive week to 64.5% of total applications from a peak of 73.1% during all of December. The adjustable rate mortgage (ARM) share of activity increased to 3.0% from a low of 1.6% in the second week of January.
Mortgage interest rates edged up last week following earlier increases due to expectations for stronger economic growth and higher inflation. The effective interest rate on a 30-year mortgage of 3.38% compared to 3.37% in the prior week. The rate was higher than the low of 2.97% during all of December, and its highest level since June of last year. The effective 15-year rate of 2.73% compared to 2.74% in the prior week and an early-January low of 2.47%. The effective rate for a 30-year Jumbo mortgage increased three basis points to 3.48%. The rate on a five-year ARM declined to 2.82% from 3.05% in the prior week.
The average mortgage loan size eased 0.9% (-9.4% y/y) to $333,200 in the week ended March 5. The average size of a purchase loan slipped 0.6% (+15.7% y/y) to $409,900, down from the record $418,000 in the third week of February. The average size of a refinanced loan fell 2.9% (-21.8% y/y) to $291,000.
Applications for fixed-rate loans declined 1.5% (-31.1% y/y) last week. Applications for adjustable-rate mortgages jumped another 3.4% (-65.9% y/y) last week after rising 7.6% in the prior 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) | 03/05/21 | 02/26/21 | 02/19/21 | Y/Y | 2020 | 2019 | 2018 |
|---|---|---|---|---|---|---|---|
| Total Market Index | -1.3 | 0.5 | -11.4 | -32.3 | 63.0 | 32.4 | -10.4 |
| Purchase | 7.2 | 1.8 | -11.6 | 2.4 | 11.4 | 6.6 | 2.1 |
| Refinancing | -5.0 | 0.1 | -11.3 | -43.0 | 111.0 | 71.1 | -24.3 |
| 30-Year Effective Mortgage Interest Rate (%) | 3.38 | 3.37 | 3.22 | 3.73
(Mar '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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