As mortgage rates come off of their historic lows, mortgage applications dropped for the second week, according to data from the Mortgage Bankers Association.
Mortgage applications dropped 5.1% for the week ending Feb. 12, after falling 4.1% the week prior. Notably, the refinance share of activity dropped to 69.3%, the first time it’s been below 70% since October.
“Expectations of faster economic growth and inflation continue to push Treasury yields and mortgage rates higher. 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,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.
On an unadjusted basis, the Market Composite Index decreased 4% compared with the previous week. The Refinance Index decreased 5% from the previous week but was still 51% higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 6% from one week earlier. The unadjusted Purchase Index decreased 1% compared with the previous week and was 15% higher than the same week one year ago.
“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,” Kand said. “The average purchase loan size hit another survey high at $412,200, partly due to a larger drop in FHA mortgage applications, which tend to have smaller-than- average loan sizes.”
The FHA share of total applications decreased to 9% from 9.5% the week prior. The VA share of total mortgage applications decreased to 13.2% from 13.3% the week prior. The USDA share of total mortgage applications remained unchanged from 0.4% the week prior.
Here is a more detailed breakdown of this week’s mortgage application data:
- The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 2.98% from 2.96%
- The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $548,250) remained unchanged at 3.11%
- The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 2.93% from 2.97%
- The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.47% from 2.5%
- The average contract interest rate for 5/1 ARMs decreased to 2.83% from 2.92%
