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Economy in Brief

U.S. Mortgage Applications Decline Again as Interest Rates Rise Further
by Tom Moeller  October 6, 2021

• Purchase & refinancing loan applications fall again.

• Mortgage rates rise to two-month high.

• Purchase loan size remains high.

The Mortgage Bankers Association's Loan Applications Index fell 6.9% (-14.9% y/y) in the week ended October 1 after declining 1.1% during the prior week. Mortgage applications to purchase a home declined 1.7% (-12.8% y/y) after falling 1.2% in the week prior. Refinancing applications fell 9.6% last week (-16.1% y/y) following a 0.9% fall one week earlier.

The share of applications for refinancing fell to 64.5% in the week of October 1 from 66.4% the week before. It was the lowest share since the second week of July. The adjustable-rate mortgage (ARM) share of activity held at 3.4%, up from 2.5% early last month.

The effective interest rate on a 30-year mortgage increased to 3.24% in the week ended October 1. It was the highest level since the first week of July. The effective 15-year rate edged higher to 2.51%, a two-month high. The effective rate for a 30-year Jumbo mortgage loan was 3.28%, after the prior week's 3.24%. For 5-year adjustable-rate loans, the effective rate fell to 2.59%, nearly the all-time low. These last two series date back only to January 2011, while the others begin in January 1990.

Applications for fixed-rate loans fell 6.9% (-16.0% y/y) in the week ended October 1, following a 1.5% decline in the week before. Applications for adjustable-rate mortgages also declined 6.9% (+32.3% y/y) after rising 15.7% in the prior week.

The average size of mortgage loans fell to $338,900 in the week of October 1. The average size of loans for purchase held fairly steady at $410,500 which was the highest level since second week of May. The average size of refinance loans declined to $299,400 from $311,200 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.

MBA Mortgage Applications (%, SA) 10/01/21 09/24/21 09/17/21 Y/Y 2020 2019 2018
Total Market Index -6.9 -1.1 4.9 -14.9 63.0 32.4 -10.4
  Purchase -1.7 -1.2 2.2 -12.8 11.4 6.6 2.1
  Refinancing -9.6 -0.9 6.5 -16.1 111.0 71.1 -24.3
30-Year Effective Mortgage Interest Rate (%) 3.24 3.20 3.11 3.19

(Sep '20)

3.40 4.34 4.94
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