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Economy in Brief

U.S. Mortgage Applications Decline as Interest Rates Rise
by Tom Moeller  October 20, 2021

• Purchases & refinancings fall.

• Interest rates rise to four-month high.

• Average loan size declines.

The Mortgage Bankers Association's Loan Applications Index declined 6.3% (-19.0% y/y) in the week ended October 15, following a 0.2% gain in the prior week. Mortgage applications for purchase fell 4.9% last week (-12.6% y/y) following a 1.5% rise. Applications for refinancing were off 7.1% (-22.4% y/y) after a 0.5% decline in the week before.

The share of applications for refinancing eased to 63.3% in the week of October 15 from 63.9% the week prior. The adjustable-rate mortgage (ARM) share of activity fell to 3.3% from 3.4% in each of the prior three weeks.

The effective interest rate on a 30-year mortgage rose to 3.33% last week from 3.29% in the prior week. It was the highest level since the second week of April. The effective 15-year rate rose to 2.61% from 2.56% in the prior week. The effective rate for a 30-year Jumbo mortgage loan increased to 3.35%, up from 3.30% in the prior week. The rate on a 5-year adjustable-rate loan rose to 3.20% after jumping sharply to 3.17% from 2.59% in the prior week. These last series date back only to January 2011, while the others begin in January 1990.

Applications for fixed-rate loans dropped 6.2% (-20.2%) in the week ended October 15 after a 0.3% rise in the week previous. Applications for adjustable-rate mortgages declined 8.0% (+38.0% y/y), the third straight week of decline.

The average size of mortgage loans fell to $335,000 in the week of October 15 from $341,400 in the week prior. The size of loans for purchase was $407,900 last week, the lowest level in four weeks. The average size of refinanced loans declined to $292,800, the lowest level since the first week of July, down from a high of $333,600 later that month.

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.

The Economic Outlook and a Cautionary Tale on "Idiosyncratic" Price Changes and Inflation from Fed Governor Christopher J. Waller can be found here.

MBA Mortgage Applications (%, SA) 10/15/21 10/08/21 10/01/21 Y/Y 2020 2019 2018
Total Market Index -6.3 0.2 -6.9 -19.0 63.0 32.4 -10.4
  Purchase -4.9 1.5 -1.7 -12.6 11.4 6.6 2.1
  Refinancing -7.1 -0.5 -9.6 -22.4 111.0 71.1 -24.3
30-Year Effective Mortgage Interest Rate (%) 3.33 3.29 3.24 3.11

(Oct '20)

3.40 4.34 4.94
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