Mortgage Applications Dips in Mid-January

According to the Mortgage Bankers Association's Weekly Mortgage Applications Survey for the week ending January 22, 2021, U.S. mortgage applications decreased 4.1 percent from one week earlier.

The Market Composite Index, a measure of mortgage loan application volume, decreased 4.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 3 percent compared with the previous week.

The Refinance Index decreased 5 percent from the previous week and was 83 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 4 percent from one week earlier. The unadjusted Purchase Index increased 3 percent compared with the previous week and was 16 percent higher than the same week one year ago.

"Mortgage rates were mixed last week, with the 30-year fixed rate rising to its highest level since November 2020 at 2.95 percent, and all other rates in the survey posting 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. The refinance index has now declined for two straight weeks, but is still 83 percent higher than last year," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "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. Activity was up 16 percent from a year ago, and the average purchase loan amount hit another record high of $395,200. 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."

The refinance share of mortgage activity decreased to 70.7 percent of total applications from 72.3 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 2.2 percent of total applications.

The FHA share of total applications increased to 9.4 percent from 9.3 percent the week prior. The VA share of total applications decreased to 12.4 percent from 13.8 percent the week prior.

The USDA share of total applications increased to 0.5 percent from 0.4 percent the week prior. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) increased to 2.95 percent from 2.92 percent, with points decreasing to 0.32 from 0.37 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.

The effective rate increased from last week. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) decreased to 3.17 percent from 3.19 percent, with points increasing to 0.31 from 0.28 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 2.88 percent from 3.01 percent, with points increasing to 0.34 from 0.29 (including the origination fee) for 80 percent LTV loans.

The effective rate decreased from last week. The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.43 percent from 2.48 percent, with points decreasing to 0.32 from 0.33 (including the origination fee) for 80 percent LTV loans.

The effective rate decreased from last week. The average contract interest rate for 5/1 ARMs decreased to 2.60 percent from 2.76 percent, with points increasing to 0.38 from 0.31 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.