U.S. Mortgage Applications Continue to Fall As Rates Rise
by:Tom Moeller
|in:Economy in Brief
Summary
- Total applications fall to lowest level since December 2019.
- Applications for purchase and refinancing weaken.
- Mortgage interest rates edge higher.
The Mortgage Bankers Association's Loan Applications Index declined 13.1% (-41.0% y/y) in the week ended February 18 following a 5.4% decline in the previous week. This was the fourth decline in the last five weeks. Applications to purchase a home fell 10.1% last week (-5.4% y/y) after declining 1.2% in the prior week. Refinancing applications dropped 15.6% last week (-56.4% y/y) after an 8.9% fall in the previous week.
The share of applications for refinancing fell to 50.1% in the week ended February 18 from 52.8% in the previous week. That share is down significantly from 73.1% averaged in December 2020. The adjustable-rate mortgage (ARM) share of activity edged up to 5.1% from 5.0% in the prior week.
Mortgage interest rates rose modestly last week. The effective interest rate on a 30-year mortgage rose to 4.20% in the week ended February 18 from 4.18% in the prior week. It was the highest level since the week ended July 12, 2019. The effective rate on a 15-year mortgage increased to 3.53% from 3.49% in the previous week. The rate on a Jumbo 30-year mortgage rose to 3.97% from 3.93%. The interest rate on a 5-year adjustable-rate mortgage eased to 3.39% from 3.54%.
Applications for fixed-rate loans fell 13.3% last week (-42.5% y/y) after declining 5.9% in the previous week. Applications for adjustable-rate mortgages weakened 10.6% (+11.9% y/y) after a 4.4% rise in the previous week.
The average size of a mortgage loan eased 0.1% (+8.0% y/y) to $372,300 in the week ended February 18. The average size of a loan for purchase fell 0.6% (+7.7% y/y) to $450,200. The average size of a refinanced loan fell 2.0% (-5.3% y/y) to $294,700.
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.
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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