Global| Feb 10 2021U.S. Mortgage Applications Drop on Mostly Higher Rates
by:Sandy Batten
|in:Economy in Brief
Summary
• Applications for both new purchases and refinancing fell. • Mortgage interest rates generally rose. The Mortgage Bankers Association Mortgage Loan Applications Index declined 4.1% w/w (+36.4% y/y) in the week ended February 5 after [...]
• Applications for both new purchases and refinancing fell.
• Mortgage interest rates generally rose.
The Mortgage Bankers Association Mortgage Loan Applications Index declined 4.1% w/w (+36.4% y/y) in the week ended February 5 after having jumped up 8.1% w/w in the previous week. Applications for new purchases fell 4.7% w/w (+19.2% y/y) following a 0.1% w/w rise in the previous week. Applications for refinancing slumped 4.2% w/w (+45.6% y/y) after an 11.4% w/w surge in the previous week. The refinance share of mortgage activity slid to 70.2% of total applications from 71.4% in the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 2.3% of total applications from 2.2%.
Mortgage interest rates have generally been on the rise this year, increasing in four of the six weeks of 2021, reflecting the general rise in rates on Treasury debt that have been pushed up in large part by expectations of a stronger economy as COVID vaccinations are rolled out. The effective interest rate on a 30-year mortgage rose five basis points to 3.06%, its highest level since mid-November. The effective 15-year rate rose four basis points to 2.57%. The effective rate for a 30-year Jumbo mortgage edged down two basis points to 3.20%. The rate on a five-year ARM was unchanged at 3.05% after having jumped up 31 basis points in the previous week.
The average mortgage loan size slipped 0.2% w/w to $331,400 in the week ended February 5. The average size of a purchase loan rose 0.9% w/w to $402,200, another new series high dating back to January 1990. The average size of a refinanced loan declined 1.4% w/w to $301,300.
Applications for fixed-rate loans decreased 4.2% w/w (+42.1% y/y), their third weekly decline in the past four weeks. Applications for adjustable-rate mortgages edged down 0.5% w/w (-50.0% y/y) in the week ended February 5.
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) | 02/05/21 | 01/29/21 | 01/22/21 | Y/Y | 2020 | 2019 | 2018 |
|---|---|---|---|---|---|---|---|
| Total Market Index | -4.1 | 8.1 | -4.1 | 36.4 | 63.0 | 32.4 | -10.4 |
| Purchase | -4.7 | 0.1 | -4.0 | 19.2 | 11.4 | 6.6 | 2.1 |
| Refinancing | -4.2 | 11.4 | -5.0 | 45.6 | 111.0 | 71.1 | -24.3 |
| 30-Year Effective Mortgage Interest Rate (%) | 3.06 | 3.01 | 3.04 | 3.78
(Feb '20) |
3.40 | 4.34 | 4.94 |
Sandy Batten
AuthorMore in Author Profile »Sandy Batten has more than 30 years of experience analyzing industrial economies and financial markets and a wide range of experience across the financial services sector, government, and academia. Before joining Haver Analytics, Sandy was a Vice President and Senior Economist at Citibank; Senior Credit Market Analyst at CDC Investment Management, Managing Director at Bear Stearns, and Executive Director at JPMorgan. In 2008, Sandy was named the most accurate US forecaster by the National Association for Business Economics. He is a member of the New York Forecasters Club, NABE, and the American Economic Association. Prior to his time in the financial services sector, Sandy was a Research Officer at the Federal Reserve Bank of St. Louis, Senior Staff Economist on the President’s Council of Economic Advisors, Deputy Assistant Secretary for Economic Policy at the US Treasury, and Economist at the International Monetary Fund. Sandy has taught economics at St. Louis University, Denison University, and Muskingun College. He has published numerous peer-reviewed articles in a wide range of academic publications. He has a B.A. in economics from the University of Richmond and a M.A. and Ph.D. in economics from The Ohio State University.
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