Mortgage applications dropped for the week ending April 2, 2021 as mortgage interest rates continue to rise from last year’s record lows, according to the Weekly Mortgage Applications Survey from the Mortgage Bankers Association.
Mortgage apps decreased 5.1 percent on a seasonally adjusted basis from the previous week. On an unadjusted basis, the Index decreased 5 percent compared with the previous week.
“Mortgage rates resumed their upward move last week, with the 30-year fixed rate at 3.36 percent,” said Joel Kan, MBA associate vice president of economic and industry forecasting. “The return of rates to the highest level since last June contributed to a slowdown in applications for both purchases and refinances.”
The market has shifted significantly to purchases when compared to the same week last year. The Refinance Index decreased 5 percent from the previous week and was 20 percent lower than the same week one year ago. On the other hand, the unadjusted Purchase Index decreased 4 percent compared with the previous week but was 51 percent higher than the same week one year ago.
“The rapidly recovering economy and improving job market is generating sizable home buying demand, but activity in recent weeks is constrained by quicker home-price growth and extremely low inventory,” Kan said. “Refinance applications declined for the fifth straight week, but there was a gain in VA loan activity. Overall, refinance demand has decreased, with volume over the past 10 weeks down by more than 30 percent.”
However, refinances still hold the majority share of the market. The refinance share of mortgage activity decreased to 60.3 percent of total applications from 60.6 percent the previous week.
The FHA share of total applications decreased to 10.2 percent from 11.3 percent the week prior. The VA share of total applications increased to 13.8 percent from 10.3 percent the week prior. The USDA share of total applications increased to 0.5 percent from 0.4 percent the week prior.