Mortgage applications decreased 1.9% last week, according to the Mortgage Bankers Association (MBA).
While the MBA’s composite index decreased by 1.9% on a seasonally adjusted basis, the refinance index decreased by 5% during the week ending January 15. The purchase index, conversely, increased 3% in the same period.
“Mortgage rates increased across the board last week, with the 30-year fixed rate rising to 2.92% - its highest level since November 2020 - and the 15-year fixed rate increasing for the first time in seven weeks to 2.48%. Market expectations of a larger than anticipated fiscal relief package, which is expected to further boost economic growth and lower unemployment, have driven Treasury yields higher the last two weeks,” said Joel Kan, MBA’s AVP of economic and industry forecasting. “After a post-holiday surge of refinances, higher rates chipped away at demand. There was a 5% drop in refinance activity, driven by a 13.5% pullback in government refinances.”
The average contract interest rate for 30-year fixed mortgages with conforming loan balances increased to 2.92% from 2.88%. Thirty-year fixed mortgages with jumbo loan balances increased to 3.19% from 3.17%.
Refis decreased as a share of mortgage activity to 72.3% of total applications, while adjustable-rate mortgage applications increased to 2.1% of totals.
“Purchase applications remained strong based on current housing demand, rising over the week and up a noteworthy 15% from last year,” Kan said. “Homebuyers in early 2021 continue to seek newer, larger homes. The average loan size for purchase loans jumped to $384,000, the second highest level in the survey.”