Overall mortgage loan application volume dipped week over week due to a significant decline in refinance applications for FHA loans, according to the Mortgage Bankers Association.
On a seasonally adjusted basis, MBA’s Market Composite Index dropped 0.8% from the week before and down 1% on an unadjusted basis.
“Mortgage rates remained near record lows for conventional loans last week, and refinances in the conventional sector continued to slightly increase. However, rates on FHA loans rose, leading to an almost 18% drop in FHA refinances,” said Mike Fratantoni, senior vice president and chief economist of MBA.
Refinance application volume also decreased slightly, with the refinance index down 0.4% from the previous week and was 121% higher than the same week a year ago. The seasonally adjusted purchase index fell 2% week over week, while the unadjusted purchase index was 1% lower than the week prior and 21% higher than the same week in 2019.
The refinance share of mortgage activity grew to 65.1% of total applications, up from 64.8%. The adjustable-rate mortgage share of activity increased to 3.2% of total applications.
The FHA share saw a week-over-week decrease of 1.2%, down from 10.8% to 9.6%. The VA share of total applications rose to 11.2% from 10.8%, while the USDA share of total applications stayed unchanged at 0.6%.
“Homebuyers stepped back slightly, and there was a larger drop in purchase application volume for FHA, VA, and USDA loans,” Fratantoni said. “This trend, along with the fact that average loan sizes are increasing, indicate that prospective first-time buyers are being impacted more by the rising economic stress caused by the resurgence in COVID-19 cases, as well as the uncertainty on how the next round of government support will take shape.”
Other key insights from MBA’s Weekly Mortgage Applications Survey: