After about two months of steady decreases, mortgage applications increased for the first time after a drop in mortgage interest rates.
Mortgage applications increased 8.6 percent on a seasonally adjusted basis for the week ending April 16, 2021, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. The Market Composite Index, a measure of mortgage loan application volume, increased 9 percent on an unadjusted basis from the week before.
This increase was driven by the Refinance Index, which increased 10 percent from the previous week, but was 23 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 6 percent from one week earlier. The unadjusted Purchase Index increased 7 percent compared with the previous week and was 57 percent higher than the same week one year ago.
Last week, mortgage interest rates dropped for the second week in a row, brought on by various economic imbalances as the economy continues to recover.
“Mortgage rates dropped to their lowest levels in around two months, prompting a small resurgence in refinance activity after six weeks of declines,” Joel Kan, MBA associate vice president of economic and industry forecasting, said in a statement. “Borrowers acted on the decrease in rates for most loan types, with both conventional and government refinance applications showing gains. The spring housing market also saw a boost from lower rates, with purchase applications – driven by a jump in conventional applications – increasing over 5 percent. MBA expects the purchase market to remain strong, with the recovering job market and supportive demographics fueling housing demand in the months ahead.”
“The average loan size for purchase applications increased after a few weeks of declines, as fewer homes available for sale make for a competitive buying market that is accelerating home-price growth,” Kan said.
While the economy is improving, homebuyer demand remains strong and COVID-era restrictions are easing, mortgage giants Fannie Mae and Freddie Mac each predicted a slowdown in the housing market as mortgage originations decrease in 2021.
The refinance share of mortgage activity increased to 60 percent of total applications from 59.2 percent the previous week. The adjustable-rate mortgage share of activity remained unchanged at 3.6 percent of total applications.
The FHA share of total applications increased to 11.3 percent from 10.8 percent the week prior. The VA share of total applications decreased to 11.5 percent from 12.1 percent the week prior. The USDA share of total applications remained unchanged from 0.4 percent the week prior.