According to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending Jan. 1, mortgage applications decreased 4.2 percent from two weeks earlier, including adjustments to account for the holidays.
The holiday-adjusted Refinance Index decreased 6 percent from two weeks ago. The unadjusted Refinance Index was 34 percent lower than two weeks ago and was 100 percent higher than the same week one year ago.
The seasonally adjusted Purchase Index decreased 0.8 percent from two weeks ago. The unadjusted Purchase Index decreased 30 percent compared with two weeks earlier and was 3 percent higher than the same week one year ago.
“Mortgage rates started 2021 close to record lows, most notably with the 30-year fixed rate at 2.86 percent, and the 15-year fixed rate at a survey low of 2.40 percent,” says the MBA’s Joel Kan. “The record-low rates for fixed-rate mortgages is good news for borrowers looking to refinance or buy a home, as around 98 percent of all applications are for fixed-rate loans.
“Despite these low rates, overall application activity fell sharply during the holiday period – which is typical every year,” he adds. “Refinance applications were 6 percent lower than two weeks ago, and purchase activity less than 1 percent from its pre-holiday level.”
The FHA share of total applications remained unchanged from 10.1 percent the week prior. The VA share of total applications increased to 13.6 percent from 12.1 percent the week prior. The USDA share of total applications increased to 0.4 percent from 0.3 percent the week prior.
“The steady demand for home buying throughout most of 2020 should continue in 2021,” Kan says. MBA is forecasting for purchase originations to rise to $1.59 trillion this year – an all-time high.”