The Mortgage Bankers Association's Weekly Mortgage Application Survey reported a 1.9% decline in mortgage applications for the week ending Jan. 15, 2021. On an unadjusted basis, the Market Composite Index decreased 1%.
According to the survey, the Refinance Index decreased 5% but remains 87% higher than the same week in 2020. Meanwhile, the seasonally-adjusted Purchase Index increased by 3% from the previous week.
"Mortgage rates increased across the board last week, with the 30-year fixed rate rising to 2.92 percent - its highest level since November 2020 - and the 15-year fixed rate increasing for the first time in seven weeks to 2.48 percent. 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 associate vice president of Economic and Industry Forecasting. "After a post-holiday surge of refinances, higher rates chipped away at demand. There was a 5 percent drop in refinance activity, driven by a 13.5 percent pullback in government refinances."
"Purchase applications remained strong based on current housing demand, rising over the week and up a noteworthy 15 percent from last year. 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," added Kan.
The refinance share of mortgage activity is down to 72.3% from 74.8% the previous week. The adjustable-rate mortgage share of activity increased to 2.1% of total applications.
Additionally, the FHA share of total applications decreased to 9.3%, the VA share of total applications decreased to 13.8% and the USDA share remained at 0.4%.