Mortgage Applications Decreased at End of 2021, MBA Survey Shows


Mortgage applications decreased 2.7% from two weeks earlier, according to data from the Mortgage Bankers Association‘s (MBA) Weekly Mortgage Applications Survey for the week ending December 31. The results include adjustments to account for the holidays.  

The Market Composite Index, a measure of mortgage loan application volume, decreased 2.7% on a seasonally adjusted basis from two weeks earlier. On an unadjusted basis, the Index decreased 32% compared with the two weeks ago. The holiday adjusted Refinance Index decreased 2% from the two weeks ago and was 40% lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 4% from two weeks earlier. The unadjusted Purchase Index decreased 32% compared with the two weeks ago and was 12% lower than the same week one year ago. 

“Mortgage rates continued to creep higher over the past two weeks, as markets maintained an optimistic view of the economy,” comments Joel Kan, MBA’s associate vice president of economic and industry forecasting. “The 30-year fixed rate increased 6 basis points to 3.33 percent – the highest since April 2021. The higher rates to close 2021 caused refinance activity to decrease 2.2 percent.”

“Refinance demand continues to dwindle, as many borrowers refinanced in 2020, and in early 2021 – when mortgage rates were around 40 basis points lower,” continues Kan. “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. Despite supply and affordability challenges, 2021 was a record year for purchase originations. MBA expects 2022 to be even stronger, with total purchase activity reaching $1.74 trillion.” 

While the index changes were calculated relative to two weeks prior, the following compositional and rate measures are presented relative to the previous week only. 

The refinance share of mortgage activity increased to 65.4% of total applications from 63.9% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 3.3% of total applications. 

Image: Photo by Gustavo Zambelli on Unsplash

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