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Purchase and Refi Apps Rebound

The Mortgage Bankers Association (MBA) is reporting that mortgage applications rose 4.2% over last week, according to the latest MBA Weekly Mortgage Applications Survey for the week ending June 11, 2021. Also on the upswing was the MBA’s Refinance Index, increasing 6% from the previous week, but 22% lower than the same week one year ago. The seasonally adjusted Purchase Index increased 2% from one week earlier. The unadjusted Purchase Index increased 11% compared with the previous week, and was 17% lower than the same week one year ago.

The refinance share of mortgage activity increased slightly to 61.7% of total applications, from 60.4% the previous week, while the adjustable-rate mortgage (ARM) share of activity decreased to 3.8% of total applications.

"Mortgage applications bounced back after three weeks of declines, increasing over 4% last week. Both purchase and refinance applications were up, including a 5.5% gain in refinances. The jump in refinances was the result of the 30-year fixed rate falling for the third straight week to 3.11 percent—the lowest since early May. U.S. Treasury yields have slid because of the uncertainty in the financial markets regarding inflation and how the Federal Reserve may act over the next few months," said Joel Kan, MBA's Associate VP of Economic and Industry Forecasting. "Purchase activity also rebounded, even as supply constraints continue to slow the housing market. An almost 5% increase in government purchase applications drove most of last week's gain, while also tempering the recent growth in loan sizes. Purchase applications were still down 17% from a year ago, which was when the mortgage market started seeing large post-shutdown increases in activity."

The FHA share of total applications increased slightly to 9.6% from 9.5% the week prior. The VA share of total applications increased to 11.5% from 11.2% the week prior. The USDA share of total applications increased to 0.5% from 0.4% the week prior.

Low rates and lack of inventory has house hunters still engaging in fierce bidding wars, as Redfin has reported that in the month of May, 70.4% of home offers written by Redfin agents faced competition, up significantly from 52.7% as reported by Redfin in May of 2020, a period impacted by pandemic stay-at-home orders.

The lack of supply continues to linger, as a recent National Association of Realtors (NAR) report authored by the Rosen Consulting Group, “Housing is Critical Infrastructure: Social and Economic Benefits of Building More Housing,” found that while the supply lack has been a problem in the making for decades—due to underinvestment and underbuilding—it is worse than the experts had predicted, requiring a nationwide commitment to combat.

With that short supply comes some hefty price points, as Redfin recently examined 400+ U.S. metro areas for the four-week period ending June 6, and found the median home-sale price having increased 24% year-over-year to $358,749, a record high for this metric. Asking prices of newly-listed homes also hit a new all-time high of $364,725, up 14% from the same time a year ago.

About Author: Eric C. Peck

Eric C. Peck has 20-plus years’ experience covering the mortgage industry, he most recently served as Editor-in-Chief for The Mortgage Press and National Mortgage Professional Magazine. Peck graduated from the New York Institute of Technology where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books and has served as Copy Editor for Entrepreneur.com.

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