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The Mortgage Bankers Association's latest Weekly Mortgage Applications Survey reported a 2.2% decline for the week ending March 26, 2021. Refinance activity has made a sharp decline over the last two weeks, falling 32% year-over-year.
The Refinance Index decreased 3% from the previous week while the seasonally-adjusted Purchase Index dipped 2% and 1% on an unadjusted basis. Despite the slight decline, the Purchase Index remained 39% higher year-over-year.
"After seven consecutive weeks of increasing mortgage rates, the 30-year fixed rate declined 3 basis points to 3.33%, which is still almost half a percentage point higher than the start of this year. Mortgage applications for refinances and home purchases both declined, but purchase activity was still convincingly higher than the pandemic-induced drop seen a year ago, as well as up 6 percent from the same week in March 2019," said Joel Kan, MBA's associate vice president of Economic and Industry Forecasting. "Many prospective homebuyers this spring are feeling the effects of higher rates and rapidly accelerating home prices. Record-low inventory is pushing home-price growth at double the rate from a year ago, and even above the 10 percent growth rates seen in 2005. The housing market is in desperate need of more inventory to cool price growth and preserve affordability."
"Higher mortgage rates continue to shut down refinance activity, as the pool of borrowers who can benefit from a refinance further shrinks," added Kan.
Meanwhile, the refinance share of mortgage activity decreased to 60.6% of total applications and the adjustable-rate mortgage share increased to 3.4%. The FHA share of total applications decreased to 11.3% from 11.7%, the VA share increased to 10.3% from 9.8% and the USDA share of mortgage applications remained stagnant at 0.4%.
Click here to view the MBA's full WMAS.