Mortgage applications decrease as rates move higher
Mortgage applications decreased 1.9% for the week ending Jan. 15 from one week earlier, per data from the Mortgage Bankers Association’s weekly survey. The drop comes after a robust 16.7% jump in applications the prior week.
The 30-year fixed rate rose to 2.92%, its highest level since last November. Additionally, the 15-year fixed rate increased for the first time in seven weeks to 2.48%.
“Market expectations of a larger than anticipated fiscal relief package, which is expected to further boost economic growth and lower unemployment, have driven Treasury yields higher the last two weeks,” said Joel Kan, MBA associate vice president of economic and industry forecasting.
“After a post-holiday surge of refinances, higher rates chipped away at demand,” Kan said. “There was a 5% drop in refinance activity, driven by a 13.5% pullback in government refinances.”
The seasonally adjusted purchase index increased 3% from one week earlier. The unadjusted purchase index increased 9% compared with the previous week, and was 15% higher than the same week one year ago.
“Homebuyers in early 2021 continue to seek newer, larger homes,” Kan said. “The average loan size for purchase loans jumped to $384,000, the second highest level in the survey.”
The FHA share of total mortgage applications decreased to 9.3% from 9.6% the week prior. The VA share of total mortgage applications increased to 13.8% from 15.8% the week prior.
Here is a more detailed breakdown of this week’s mortgage application data:
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) increased to 2.92% from 2.88%The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) increased to 3.19% from 3.17%The average contract interest rate for 30-year fixed-rate mortgages increased to 3.01% from 2.93%The average contract interest rate for 15-year fixed-rate mortgages increased to 2.48% from 2.39%The average contract interest rate for 5/1 ARMs increased to 2.76% from 2.66%
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