Mortgage Activity Slides as Interest Rates Rise Again

Mortgage Weekly Update

Mortgage activity dipped this week as interest rates once again jumped. According to the latest data from the Mortgage Bankers Association, overall mortgage applications dropped 5.1% — up from last week’s decrease of 4.1%.

Purchase loans fell the most, dipping 6% for the week, while refinances dropped 5%. Refinances accounted for just 69% of all activity, marking their lowest point since October.

According to Joel Kan, MBA’s associate vice president of economic and industry forecasting, higher mortgage rates are to blame for the lagging activity.

“Since hitting a survey low in December, the 30-year fixed rate has slowly risen, and last week climbed to its highest level since November 2020,” Kan said. “The housing market in early 2021 continues to be constrained by low inventory and higher prices. Conventional and government applications to buy a home declined last week, but purchase activity overall is still strong — up 15% from last year.”

The average purchase loan size increased yet again, hitting a record high of $412,200. Decreasing FHA loan applications played a role in the bump, according to Kan. FHA loans accounted for just 9% of all mortgage activity this week.

More in mortgage and housing news

  • The Biden Administration has extended mortgage forbearance options on FHA, USDA, and VA loans. Borrowers can now file for forbearance until June 30. Forbearance periods have also been extended, allowing for up to 18 months of forbearance total.
  • The share of mortgage loans in forbearance dropped this week, hitting 5.35%, according to MBA. Around 2.6 million homeowners are still on a forbearance plan.
  • The Department of Housing and Urban Development extended Fair Housing Act protections to LGBTQ Americans this week. According to an announcement from the agency, it will now investigate complaints of housing discrimination based on sexual orientation and gender identity.
  • New data from Redfin shows that almost 56% of all buyers faced a bidding war in January. The competition was even hotter on higher-priced homes — those valued between $800,000 and $1 million.

This week in mortgage rates

Mortgage rates rose on both conforming and jumbo loans and dropped on FHA, 15-year, and 5/1 ARMs.

Here’s how rates looked for each loan type:

Make sure to check back here next week for the latest mortgage news.

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