Mortgage applications fall during last two weeks of 2021

by John Yellig

Mortgage applications fell 2.7% on a seasonally adjusted basis during the last two weeks of 2021, while the average 30-year fixed-rate mortgage rose six basis points to 3.33%, its highest level since April, the Mortgage Bankers Association said, citing its Market Composite Index.

The average contract interest rate for 30-year fixed-rate mortgages backed by the Federal Housing Administration increased to 3.40% from 3.39%. The average contract interest rate for a 15-year fixed-rate mortgage was flat at 2.6%, while the average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances of more than $548,250 decreased to 3.31% from 3.35%.

On an unadjusted basis, the market composite index, which measures mortgage-loan application volume, fell 32%. The refinance index, meanwhile, slid 2% from the previous two-week period and was down 40% from the same week a year ago. The refinance share of mortgage activity increased to 65.4% of total applications from 63.9% the previous week.

The seasonally adjusted purchase index decreased 4% from two weeks earlier, while the unadjusted purchase index decreased 32% compared to the preceding two weeks and was 12% lower than one year ago.

“Mortgage rates continued to creep higher over the past two weeks, as markets maintained an optimistic view of the economy,” MBA associate vice president of economic and industry forecasting Joel Kan said in a press release. “The purchase market also finished the year on a slower note, with the final week coming in at the weakest since October 2021. Even though average loan sizes were lower, home-price appreciation remains at very high levels.”

The adjustable-rate mortgage share of activity slid to 3.3% of total applications. The FHA share of total applications increased to 9.2% from 8.5% in the preceding week, while the VA share of applications declined to 11.3% from 11.4%. The USDA share of applications was flat at 0.4%.

“Despite supply and affordability challenges, 2021 was a record year for purchase originations,” Kan added. “MBA expects 2022 to be even stronger, with total purchase activity reaching $1.74 trillion.”

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