U.S. Mortgage Applications Decline As Rates Rise
by:Tom Moeller
|in:Economy in Brief
Summary
- Total applications fall for second week in last three.
- Decline in purchase applications outpaces refinancings.
- 30-year mortgage interest rates continue to increase.
The Mortgage Bankers Association's Loan Applications Index declined 8.1% in the week ended February 4 (-39.6% y/y) following a 12.0% increase in the prior week. Applications to purchase a home declined 9.6% (-11.4% y/y) after rising 4.0% in the week ended January 28. Refinancing applications weakened 7.3% and last week were down roughly one-half y/y. The latest decline was the fourth in the last five weeks.
The share of applications for refinancing fell to 56.2% in the week ended February 4 from 57.3% in the previous week. These shares were down from 64.3% averaged in December. The adjustable-rate mortgage (ARM) share of activity held steady at 4.5%.
The effective interest rate on a 30-year mortgage rose to 3.95% in the week ended February 4 from 3.89% in the prior week. It has increased from a 2.95% low in mid-December 2020. The effective rate on a 15-year mortgage increased to 3.28% from 3.11% in the previous week, while the rate on a Jumbo 30-year mortgage rose to 3.72% from 3.68%. The interest rate on a 5-year adjustable-rate mortgage rose four basis points to 3.26%.
Applications for fixed-rate loans fell 8.1% last week (-41.0% y/y) after an 11.8% increase in the previous week. Applications for adjustable-rate mortgages weakened 8.4% (+19.2% y/y) after a 14.6% rise in the previous week.
The average size of a mortgage loan rose to $366,200 (10.5% y/y) in the week ended February 4 from $365,300 in the previous week. The average size of a loan for purchase rose to a record $466,900 (11.1% y/y) from $441,100 in the previous week. The average size of a refinanced loan fell to $303,400 (+0.7% y/y) from $308,700 in the previous 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.
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.
More Economy in Brief
