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Economy in Brief

U.S. Mortgage Applications Decline, Paced by Fewer Refinancings
by Tom Moeller  March 10, 2021

• 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
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