The latest economic and policy trends facing mortgage servicers

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Mortgage

Mortgage applications increase for second straight week

Refi share up to 63.3% of applications last week

Mortgage applications increased for the second straight week, this time jumping 1.2% for the week ending May 14, 2021, according to the latest report from the Mortgage Bankers Association.

All loan types hit their highest levels in two weeks.

Mortgage rates were still lower than levels reported in late March and early April, providing additional opportunity for borrowers to refinance, said Joel Kan, MBA associate vice president of economic and industry forecasting.

“Ongoing volatility in refinance applications is likely if rates continue to oscillate around current levels,” Kan said. “There continues to be strong demand for buying a home, but persistent supply shortages are constraining purchase activity, and building material shortages and higher costs are making it more difficult to increase supply. As a result, home prices and average purchase loan balances continue to rise, with the average purchase application reaching $411,400 — the highest since February.”

Per the National Association of Home Builders, lumber prices have tripled over the past 12 months and have caused the price of an average new single-family home to increase by $35,872 — up from the NAHB’s calculated $24,000 extra HousingWire reported back in February. The hike has also added nearly $13,000 to the market value of an average new multifamily home, which translates into households paying $119 a month more to rent a new apartment, the NAHB said.


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Presented by: Citi

Other building material prices have been steadily rising as well, said Chuck Fowke, NAHB chairman, who added that the trade organization has been “monitoring” the situation.

The refinance share of activity increased to 63.3% of total mortgage applications from 61.3% the previous week. The FHA share of total mortgage applications decreased to 9.2% from 9.9% the week prior. The VA share of total applications increased to 12% from 11.7%.

Here is a more detailed breakdown of this week’s mortgage applications data:

  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 3.15% from 3.11%
  • The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $548,250) increased to 3.31% from 3.27%
  • The average contract interest rate for 30-year fixed-rate mortgages increased to 3.13% from 3.07%
  • The average contract interest rate for 15-year fixed-rate mortgages increased to 2.54% from 2.49%
  • The average contract interest rate for 5/1 ARMs increased to 2.58% from 2.57%

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