Global| Jan 27 2021U.S. Mortgage Applications Tumble
by:Sandy Batten
|in:Economy in Brief
Summary
• Declines in both purchase and refinancing applications. • Mortgage interest rates mostly edged down but remain off recent lows. The Mortgage Bankers Association Mortgage Loan Applications Index fell 4.1% w/w (+39.7% y/y) in the [...]
• Declines in both purchase and refinancing applications.
• Mortgage interest rates mostly edged down but remain off recent lows.
The Mortgage Bankers Association Mortgage Loan Applications Index fell 4.1% w/w (+39.7% y/y) in the weekend January 22 on top of a 1.9% w/w decline in the previous week. Applications for both new purchases and refinancing fell last week. Purchase applications slumped 4.0% w/w (+6.5% y/y) after a 2.7% w/w rise in the previous week to their highest level in more than a decade. Applications for refinancing dropped 5.0% w/w (+65.1% y/y) on top of a 4.7% weekly decline in the previous week. The refinance share of mortgage activity decreased to 70.7% of total applications from 72.3% in the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 2.2% of total applications.
Mortgage interest rates mostly edged down over the past week though the prospect of further fiscal stimulus and the rollout of vaccines seem to have halted the recent general decline. In the week ended January 22, the effective interest rate on a 30-year mortgage edged up one basis point to 3.04%, its second consecutive weekly advance and the highest rate since mid-November. The effective 15-year rate slid five points to 2.51% but gave back only about half of the nine-basis-point jump in the previous week. The effective rate for a 30-year Jumbo mortgage declined one basis point to 3.26% but is still nine basis points above its series low reached a month ago. The rate on a five-year ARM fell 14 basis point to 2.74%.
The average mortgage loan size increased 0.7% w/w to $329,700 in the week ended January 22. The average size of a purchase loan rose 2.9% w/w to $395,200, a new series high dating back to January 1990. The average size of a refinanced loan slipped 1.0% w/w to $302,500.
Applications for fixed-rate loans fell 4.3% w/w (+43.4% y/y) and applications for adjustable-rate mortgages increased 4.1% w/w (-34.5% y/y) in the week ended January 22.
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) | 01/22/21 | 01/15/21 | 01/08/21 | Y/Y | 2020 | 2019 | 2018 |
|---|---|---|---|---|---|---|---|
| Total Market Index | -4.1 | -1.9 | 16.7 | 39.7 | 63.0 | 32.4 | -10.4 |
| Purchase | -4.0 | 2.7 | 8.0 | 6.5 | 11.4 | 6.6 | 2.1 |
| Refinancing | -5.0 | -4.7 | 20.1 | 65.1 | 111.0 | 71.1 | -24.3 |
| 30-Year Effective Mortgage Interest Rate (%) | 3.04 | 3.03 | 2.97 | 3.92
(Jan '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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