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Economy in Brief

U.S. Mortgage Applications Decrease Again
by Carol Stone, CBE  July 7, 2021

• Applications for both purchase and refinance decline.

• Rates on fixed-rate mortgages decrease; rates on adjustable-rate loans steady after previous jump.

• Average size of loans to purchase edges higher, while those to refinance are moderately smaller.

The Mortgage Bankers Association's Loan Applications Index fell 1.8% w/w (-19.2% y/y) in the week ended July 2 after falling 6.9% the week before. This latest week's index was 627.0 (March 16, 1990 = 100), the lowest since 606.2 in the week of January 17, 2020. Applications to purchase a home decreased 1.1% w/w (-22.4% y/y) in this latest July 2 week, after falling 4.8% w/w the previous week. Applications for refinancing fell 2.3% w/w (-17.3% y/y) following an 8.2% w/w decrease the week before.

The share of applications for refinancing edged lower to 61.6% of total applications in the July 2 week from 61.9% the week before. That share is down from 73.1% during all of last December. The adjustable-rate mortgage (ARM) share of activity fell to 3.3%, the lowest since March 19, from 3.6% in the previous week.

The effective interest rate on a 30-year mortgage was 3.26% in the latest week, down 6 basis point from the two previous weeks. The series low was 2.95% in the weeks of December 11 and 18, 2020. The recent high was 3.48% the week of March 19. The effective 15-year rate was 2.58% in the July 2 week, down from 2.65% the week before. The effective rate for a 30-year Jumbo mortgage was 3.28%, down 4 basis point in the week. The rate on a 5-year ARM was unchanged at 3.07%, stabilizing after the prior week's 29-basis-point increase.

Applications for fixed-rate loans decreased 1.5% w/w (-19.1% y/y) in the week ended July 2; that put the index at 636.6, the lowest level since mid-January 2020. Applications for adjustable-rate mortgages fell 10.7% (-53.1% y/y), carrying that volume measure to its lowest since this past January 22.

The average size of mortgage loans fell 0.9% w/w to $335,400 in the July 2 week. As in the June 25 week, the pattern was somewhat mixed between loans to purchase and those to refinance. The size of refinance loans fell 1.9% to $291,900 while that of loans to purchase edged up 0.1% to $405,300.

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) 07/02/21 06/25/21 06/18/21 Y/Y 2020 2019 2018
Total Market Index -1.8 -6.9 2.1 -19.2 63.0 32.4 -10.4
  Purchase -1.1 -4.8 0.6 -22.4 11.4 6.6 2.1
  Refinancing -2.3 -8.2 2.8 -17.3 111.0 71.1 -24.3
30-Year Effective Mortgage Interest Rate (%) 3.26 3.32 3.32 3.30

(Jul '20)

3.40 4.34 4.94
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