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Mortgage volume climbs for second week, despite interest rate spikes

Borrowers appeared to wave off jumps in interest rates last week, leading mortgage volumes to rise for a second consecutive week, according to the Mortgage Bankers Association.

The Market Composite Index, which tracks mortgage-application activity based on the MBA’s weekly survey, posted a seasonally adjusted 2.1% weekly increase for the period ending June 18, reflecting gains in both refinances and purchases. On an unadjusted basis, the index came in 1% higher from the previous week. Compared to the same week in 2020, when heightened economic activity occurred as pandemic-related restrictions were lifted, overall mortgage volume was 11.2% lower on a seasonally adjusted basis.

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The Refinance Index also increased for a second week, rising 3%, driven by a bump in conventional refinancing applications, according to Joel Kan, MBA’s associate vice president of economic and industry forecasting. Compared to one year ago, refinancing volume was 9% lower.

The Purchase Index climbed 1% on a seasonally adjusted basis from a week earlier, while the unadjusted volume decreased 1%. The unadjusted purchase index came in 14% below its level for the same week last year.

“Government-purchase applications drove most of last week’s increase, which also contributed to a slightly lower overall average purchase-loan size,” Kan said.

The average dollar amount of purchases declined to $398,700 from $400,000 the previous week, a drop of 0.3%. It was the first week average purchase size had fallen below the 400K mark since early April. Home prices have hit record highs this year, making purchases unaffordable for many potential buyers, and leading purchase-mortgage sizes to grow accordingly.

But the fall in purchase size was offset by an increase in the average amount for refinances, which jumped 2% to $305,200 from $299,200 one week earlier. The overall average size of all mortgages also clocked in higher than the previous week, increasing to $340,200 from $337,800.

Refinances take larger share of pie
Thanks to elevated refinancing activity, its share of total mortgage volume increased for the second consecutive week, taking 62.5%, compared to 61.7% a week earlier.

The share of adjustable-rate mortgage applications also edged higher, up to 3.9% from 3.8% the previous week.

MBA Apps share 061821.jpeg

But mortgage applications backed by government programs showed no overall share increases. Federal Housing Authority-backed mortgages accounted for 9.5% of total volume, compared to 9.6% the prior week, while loans taken through Veterans Affairs-sponsored programs dropped to 11.2% from 11.5% of share. The share of mortgages backed by the U.S. Department of Agriculture was unchanged week over week at 0.5%.

30-year fixed-rates jump six to seven basis points across the board

  • The average contract interest rate of 30-year fixed-rate mortgages with conforming loan balances of $548,250 climbed to 3.18%, its highest level in a month, compared to 3.11% a week earlier.
  • The average contract interest rate of 30-year fixed-rate jumbo loans (with balances greater than $548,250) also rose, up six basis points to 3.26% from 3.20% the prior week.
  • The contract interest rate average of 30-year fixed-rate mortgages backed by the Federal Housing Authority increased to 3.21%. A week earlier, the average stood at 3.14%.
  • The average contract interest rate for 15-year fixed-rate mortgages climbed to 2.58% , up from 2.49% the previous week.
  • The interest rate for 5/1 adjustable-rate mortgages was the only major mortgage average to not register an increase, remaining unchanged at 2.69% week over week.
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Mortgage applications Mortgage rates Refinance Mortgage Bankers Association
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