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As rates rise, mortgage applications dip

30-year fixed rate jumps to 3.18%, keeping new application numbers low

Mortgage applications dropped again, falling 0.9% from the previous week, according to the latest report from the Mortgage Bankers Association for the week ending April 30, 2021.

MBA’s Associate Vice President of Economic and Industry Forecasting Joel Kan called last week’s mortgage activity “a mixed bag,” between rates, loan sizes, and government purchase applications.

“Mortgage rates were slightly higher, refinance applications were essentially unchanged, and purchase applications fell for the second straight week,” Kan said. “Both conventional and government purchase applications declined, but average loan sizes increased for each loan type. This is a sign that the competitive purchase market, driven by low housing inventory and high demand, is pushing prices higher and weighing down on activity. The higher prices are also affecting the mix of activity, with stronger growth in purchase loans with larger-than-average balances.”

The refinance index increased 0.1% after weeks of decreases. The seasonally adjusted purchase index decreased 3% from one week earlier, and the unadjusted purchase index was down 2% compared with the previous week — but was still 24% higher than the same week one year ago.

It’s important to note, Kan said, that mortgage application numbers from this time last year reflect challenges brought on by the pandemic.

“The 30-year fixed rate was up slightly to 3.18%, which is still 22 basis points lower than a year ago, but higher than it was between mid-2020 and February 2021,” he said.

The refinance share of activity increased to 61% of total mortgage applications from 60.6% the previous week.

The FHA share of total mortgage applications decreased to 10.1% from 10.7% the week prior. The VA share of total applications also decreased, from 12.2% to 11.9%

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 ($548,250 or less) increased to 3.18% from 3.17%
  • The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $548,250) increased to 3.31% from 3.28%
  • The average contract interest rate for 30-year fixed-rate mortgages increased to 3.13% from 3.12%
  • The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.54% from 2.55%
  • The average contract interest rate for 5/1 ARMs increased to 2.76% from 2.59%

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