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Mortgage

Rising mortgage rates push applications lower

Purchase loan amounts continue to rise

For the second week in a row, mortgage applications decreased – this time, down 4.1% for the week ending Jan. 22, according to data from the Mortgage Bankers Association. The 30-year-fixed rate rose to 2.95%, its highest level since November 2020, according to Joel Kan, MBA associate vice president of economic and industry forecasting.

All other mortgage rates in the survey posted a decline.

“In a sign that borrowers are increasingly more sensitive to higher rates, large declines in government purchase applications and refinance applications pulled overall activity lower,” Kan said. “Purchase applications also decreased last week, but the impressive trend of year-over-year growth since the second half of 2020 has continued in early 2021.”

The seasonally adjusted purchase index decreased 4% from one week earlier, while the unadjusted purchase index increased 3 % compared with the previous week.

The refinance index has now declined two straight weeks, but is still 83% higher than last year.


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Kan noted that the unadjusted purchase index was still 16% higher than the same week one year ago.

“Since hitting a recent low in April 2020, the average purchase loan amount has steadily risen – in line with the accelerating home-price appreciation occurring in most of the country because of strong demand and extremely low inventory levels,” he said.

The FHA share of total mortgage applications increased to 9.4% from 9.3% the week prior. The VA share of total mortgage applications decreased to 12.4% from 13.8% 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 2.95% from 2.92%
  • The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) decreased to 3.17% from 3.19%
  • The average contract interest rate for 30-year fixed-rate mortgages decreased to 2.88% from 3.01%
  • The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.43% from 2.48%
  • The average contract interest rate for 5/1 ARMs decreased to 2.60% from 2.76%

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