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Refis Spur Rise in Mortgage Apps

The latest Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey found that mortgage applications rebounded over last week’s totals, increasing 5.7% week-over-week, spurred on by mortgage rates falling to its lowest mark since February 2021.

The Market Composite Index, a measure of mortgage loan application volume, increased 5.7% on a seasonally-adjusted basis from one week earlier. On an unadjusted basis, the Index increased 6% over the previous week. The Refinance Index rose 9% from the previous week, and was 10% lower than the same week one year ago. The seasonally-adjusted Purchase Index decreased 2% from one week earlier. The unadjusted Purchase Index decreased 1% compared to the previous week, and was 18% lower than the same week a year ago.

"The 10-year Treasury yield fell last week, as investors grew concerned about increasing COVID-19 case counts, and the downside risks to the current economic recovery,” said Joel Kan, MBA's Associate VP of Economic and Industry Forecasting. “Refinance applications jumped, as the 30-year fixed mortgage rate declined to its lowest level since February 2021, and the 15-year rate fell to another record low dating back to 1990. Refinances for conventional loans increased over 11%. With over 95% of refinance applications for fixed rate mortgages, borrowers are looking to secure a lower rate for the life of their loan."

The FHA share of total applications decreased to 9.1% from 9.6% the week prior. The VA share of total applications decreased to 9.8% from 10.5% the week prior. The USDA share of total applications remained unchanged at 0.5% over the previous week.

And while purchase apps, the refi share of mortgage activity increased to 67.2% of total applications from 64.9% the previous week. The Federal Housing Finance Agency (FHFA) recently announced that effective August 1, 2021, Fannie Mae and Freddie Mac (the GSEs) will eliminate the Adverse Market Refinance Fee for loan deliveries. Lenders will no longer be required to pay the GSEs a 50-basis point fee when they deliver refinanced mortgages. The fee was designed to cover losses projected as a result of the COVID-19 pandemic.

"The combination of the removal of the Adverse Market Refinance Fee by the FHFA along with lenders responding aggressively by lowering interest rates to five-month lows, led to a substantial uptick in refinances," said Robert Humann, Chief Revenue Officer at Credible.com. "In taking a look at the analytics on our multi-lender platform, refinance pre-qualifications were up 104% mid-way through last week compared to just the Friday before when the announcement that the fee was being removed was announced. For homeowners who have not refinanced to take advantage of the low rate climate, now is a great time.”

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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