Mortgage Activity Slips Again as Interest Rates Rise

Mortgage Weekly Update

Mortgage activity fell yet again this week, with applications dropping 4.1% over the week prior. 

According to the MBA’s weekly survey data, refinance applications fell 5%, while purchase loan applications decreased 4%. Volumes in both categories are still higher than 2020’s numbers.

Joel Kan, MBA’s associate vice president of economic and industry forecasting, says the fall was likely due to slightly higher mortgage rates, which averaged 2.95% on 30-year, fixed-rate loans last week. That’s up from 2.92% prior and the highest rate seen in nearly three months. 

“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. “The refinance index has now declined for two straight weeks.”

Despite the dips, Kan says there’s still room for optimism — particularly in the purchase department.

“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,” he said. “Activity was up 16% 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.” 

More in mortgage and housing news

  • The Department of Housing and Urban Development has extended its forbearance deadline. Now, FHA borrowers affected by the COVID-19 pandemic can apply for mortgage forbearance through March 31. They can also opt to extend their plan after 180 days.
  • According to MBA, the share of mortgage loans in forbearance actually increased this week, hitting 5.38% of all loans. That’s up from 5.37% last week and amounts to about 2.7 million homeowners total.
  • The Census Bureau released its newest residential construction numbers, and housing starts are up considerably. According to the data, they’re now at their highest point in 14 years.

This week in mortgage rates

The average rate on 30-year, fixed-rate loans rose this week, but rates dropped on all other loan products.

Here’s how rates looked for each loan type:

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

Information contained in this article may include links or references to third-party resources or content. Embrace Home Loans does not endorse or guarantee the accuracy of this third-party information. If you follow these links, you will be linking to a third party website not operated by Embrace. We are not responsible for the content of that website and its privacy & security policies may differ from those practiced by Embrace.

​This information is distributed for professional use and is not intended to be shared with, or viewed by, consumers. To the average consumer, the information here may be misleading or exclude important disclosures.

Share this:
Related

Aly Yale

Aly J. Yale is a freelance writer focusing on real estate, mortgage, and the housing market. Her work has been featured in Forbes, Bankrate, The Motley Fool, Business Insider, The Balance, and more. Prior to freelancing, she served as an editor and reporter for The Dallas Morning News. She graduated from Texas Christian University's Bob Schieffer College of Communication with a major in radio-TV-film and news-editorial journalism. Connect with her at AlyJYale.com or on Twitter at @AlyJwriter.