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Economy in Brief

U.S. Mortgage Applications Fell Over Last Two Weeks of 2020
by Sandy Batten  January 6, 2021

• Decline led by drop in applications for refinancing.

• Mortgage interest rates mostly fell further to new record lows.

The Mortgage Bankers Association Mortgage Loan Applications Index fell 4.2% in the last two weeks of 2020. The MBA did not release data last week; so this release contained data for the previous two weeks. The MBA made adjustments to account for the holidays. Applications tumbled 5.8% w/w in the week ended December 25 and rebounded modestly 1.7% w/w in the week ended January 1. Applications for purchase edged down 0.8% in the last two weeks of 2020 while applications for refinance fell a more substantial 6.0%. For all of 2020, applications were up 63%.

The effective interest rate on a 30-year mortgage was little changed over the past two weeks. It rose to 2.99% in the week ended December 25 but fell to 2.96% in the week ended January 1, just one basis point above its all-time low reached in the week ended December 18. The 15-year rate fell in each of the past two weeks, falling a cumulative three basis points to a new record low of 2.47% in the week ended January 1. The survey began in January 1990. The effective rate for a Jumbo mortgage fell two basis points over the past two weeks, to a new survey low of 3.17%. This survey began in 2011. The rate on a five-year ARM fell 11 basis points to 2.78%.

Over the past two weeks, the average mortgage loan size fell to $322,800 from $327,100. The average size of a purchase loan jumped up $9,700 to a record $386,500 in the week ended December 25 but slipped to $378,500 in the week ended January 1. The average size of a refinanced loan also increased in the Christmas week, to $317,400, but slumped to $302,800 in the week ended January 1.

Over the last two weeks of 2020, applications for fixed-rate loans fell 4.0% (+79.3% y/y) and applications for adjustable-rate mortgages dropped 14.5% (-21.0% y/y).

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) 01/01/21 12/25/20 12/18/20 Y/Y 2020 2019 2018 2017
Total Market Index 1.7 -5.8 0.8 75.5 63.0 32.4 -10.4 -17.8
  Purchase -1.6 0.8 -4.6 19.2 11.4 6.6 2.1 5.6
  Refinancing 3.0 -8.8 3.8 128.6 111.0 71.1 -24.3 -34.0
30-Year Effective Mortgage Interest Rate (%) 2.96 2.99 2.95 4.07

(Dec '19)

3.40 4.34 4.94 4.32
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