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Purchase Apps Hit Five-Month High

According to the latest Weekly Mortgage Applications Survey [1] from the Mortgage Bankers Association (MBA) [2], mortgage applications increased slightly week-over-week, rising 0.3% for the week ending September 10, 2021.

The refinance share of mortgage activity decreased to 64.9% of total applications, down from 66.8% the previous week, the lowest reading since July. The adjustable-rate mortgage (ARM) share of activity increased to 3.3% percent of total applications.

MBA’s Market Composite Index, a measure of mortgage loan application volume, increased 0.3% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 10% compared with the previous week. The Refinance Index decreased 3% from the previous week, and was 3% lower than the same week one year ago. The seasonally adjusted Purchase Index increased 8% from one week earlier. The unadjusted Purchase Index decreased 5% compared with the previous week and was 12% lower than the same week one year ago.

"Purchase applications—after adjusting for the impact of Labor Day—increased over 7% last week to their highest level since April 2021,” said Joel Kan [3], MBA's Associate VP of Economic and Industry Forecasting. “Compared to the same week last September, which was right in the middle of a significant upswing in home purchases, applications were down 11%—the smallest year-over-year decline in 14 weeks.”

The FHA share of total applications decreased to 9.9% from 10.9% the week prior. The VA share of total applications decreased to 10.2% from 10.4% the week prior. The USDA share of total applications decreased to 0.4% from 0.5% the week prior.

“Both conventional and government purchase applications increased, and the average loan size for a purchase application rose to $396,800,” said Kan. “The very competitive purchase market continues to put upward pressure on sales prices."

While Kan mentions the rise in average loan sizes impacting application volume, a new analysis by LendingTree [4] has found that down payment costs and keeping pace this spike in prices is driving many first-time homebuyers away. According to Jacob Channel [4], a Senior Economic Analyst for LendingTree, the cheapest average down payment for a top-50 metro area was found in Oklahoma City, Oklahoma, where buyers paid an average $28,267 on a new home, representing nearly 47% of the median income for that area. The market with the highest down payment dollar value was found in San Jose, California, where the average buyer paid $115,138 or 88% of the median area income.