Mortgage Rates, Applications Jump Thanks to Economic Optimism

Mortgage Weekly Update

Mortgage applications recovered slightly from last week, inching up 0.5% compared to the week prior, according to the Mortgage Bankers Association. Purchase loans increased by 2%, while refinance loans rose just 0.1%.

The news is a little surprising given the notable jump seen in rates over the week. The average rate on 30-year, fixed-rate loans rose from 3.08% to 3.23% — the highest single-week increase in almost a year.

According to Joel Kan, MBA’s associate vice president of economic and industry forecasting, the rise was due to “market expectations of stronger economic growth and higher inflation.” 

As a result of the rising rates, the share of refinances fell again for the fourth straight week. Just 67.5% of all loans were refinances — down a full percent from the week before.

The share of government loans, on the other hand, increased. FHA loans accounted for 12.1% of all mortgage applications (up from 11.2%), and USDA loans saw a 0.4% share (up from 0.3%).

More in mortgage and housing news

  • The number of mortgage loans in forbearance increased this week, jumping to 5.23% of all mortgage loans. According to MBA, an estimated 2.6 million homeowners are still on a forbearance plan.
  • The Federal Housing Finance Agency extended mortgage forbearance timelines for homeowners with Fannie Mae- or Freddie Mac-owned loans. Now, homeowners have up to 18 months forbearance (if they applied before February 28.) This matches the FHA timelines recently updated by HUD.
  • The Department of Housing and Urban Development announced a 90-day foreclosure ban on FHA borrowers impacted by the recent winter storms in Texas. Borrowers who can’t make their payments should alert their servicer if they’re affected.
  • According to a new study from Realtor.com, buying a home is more affordable than renting one in 15 of the top 50 metro markets. That’s up from 13 markets a year ago. 

This week in mortgage rates

Mortgage rates rose on all loan types, with 5/1 ARMs seeing the smallest increase (just 0.1 points).

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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By Aly Yale / March 5th, 2021 / Categories: / Tags:

Aly Yale

Aly J. Yale is a mortgage and real estate writer based in Houston. Connect with her at AlyJYale.com or on Twitter at @AlyJwriter.