After weeks of decreases, mortgage applications rose 2.1% for the week ending May 7, 2021, according to the most recent report from the Mortgage Bankers Association.
Aiding the jump in mortgage applications was another sub-3% week of mortgage rates, which fell to 2.96% according to the Freddie Mac PMMS.
“The decline in rates helped the refinance index reach its highest level in eight weeks, driven by a 4% increase in conventional refinances,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “Additionally, refinance loan balances increased for the fourth straight week, an indication that higher-balance borrowers acted to take quick advantage of lower rates.”
Kan added that the first week of May was strong for the purchase market, with applications up 13% from a year ago. That’s also around the time the COVID-19 pandemic began spreading throughout the country, he noted.
“Most markets this spring continue to see robust demand, but activity continues to be constrained by insufficient inventory levels, as well as homebuilder challenges related to the ongoing shortages and price increases for building materials,” he said.
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The refinance share of activity increased to 61.3% of total mortgage applications from 61% the previous week. The FHA share of total mortgage applications decreased to 9.9% from 10.1% the week prior. The VA share of total applications also decreased, from 11.9% to 11.7%.
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) decreased to 3.11% from 3.18%
- The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $548,250) decreased to 3.27% from 3.31%
- The average contract interest rate for 30-year fixed-rate mortgages decreased to 3.07% from 3.13%
- The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.49% from 2.54%
- The average contract interest rate for 5/1 ARMs increased to 2.57% from 2.76%