Wednesday, January 06, 2021

MBA: Mortgage Applications Decrease "Over a Two-Week Period" in Latest Weekly Survey

by Calculated Risk on 1/06/2021 07:00:00 AM

From the MBA: Mortgage Applications Decreased Over a Two-Week Period in Latest MBA Weekly Survey

Mortgage applications decreased 4.2 percent from two weeks earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 1, 2021. The results include adjustments to account for the holidays.

... The holiday adjusted Refinance Index decreased 6 percent from two weeks ago. The unadjusted Refinance Index was 34 percent lower than two weeks ago and was 100 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 0.8 percent from two weeks ago. The unadjusted Purchase Index decreased 30 percent compared with two weeks earlier and was 3 percent higher than the same week one year ago.

“Mortgage rates started 2021 close to record lows, most notably with the 30-year fixed rate at 2.86 percent, and the 15-year fixed rate at a survey low of 2.40 percent. The record-low rates for fixed-rate mortgages is good news for borrowers looking to refinance or buy a home, as around 98 percent of all applications are for fixed-rate loans,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Despite these low rates, overall application activity fell sharply during the holiday period – which is typical every year. Refinance applications were 6 percent lower than two weeks ago, and purchase activity less than 1 percent from its pre-holiday level.”

Added Kan, “The steady demand for home buying throughout most of 2020 should continue in 2021. MBA’s is forecasting for purchase originations to rise to $1.59 trillion this year – an all-time high.”
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 2.86 percent from 2.90 percent, with points increasing to 0.35 from 0.31 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added
Mortgage Refinance IndexClick on graph for larger image.

The first graph shows the refinance index since 1990.

The refinance index has been very volatile recently depending on rates and liquidity.

But with record low rates, the index remains up significantly from last year.

Mortgage Purchase Index The second graph shows the MBA mortgage purchase index

According to the MBA, purchase activity is up 3% year-over-year unadjusted.

Note: Red is a four-week average (blue is weekly).