Mortgage applications increased for the second week on a seasonally adjusted basis even as interest rates rose. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of mortgage loan application volume, increased 2.1 percent on a seasonally adjusted basis during the week ended June 18, and was 1 percent higher before adjustment.

The Refinance Index was up by 3 percent compared to the prior week but was 9 percent lower than the same week in 2020. The refinance share of mortgage activity increased to 62.5 percent of total applications from 61.7 percent the previous week.

The seasonally adjusted Purchase Index moved 1 percent higher and was 1 percent lower than the prior week on an unadjusted basis. Purchase mortgage applications were 14 percent lower year-over-year.


Refi Index vs 30yr Fixed


Purchase Index vs 30yr Fixed


"Mortgage rates increased last week, with the 30-year fixed rate rising to 3.18 percent - the highest level in a month. Despite the jump in rates, refinances increased for the second consecutive week, pushed higher by a 4 percent bump in conventional refinance applications," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Purchase applications have regained an upward trend over the past few weeks. Activity was slightly higher for the third straight week, but remained lower than the same week a year ago. Government purchase applications drove most of last week's increase, which also contributed to a slightly lower overall average purchase loan size."

The FHA share of total applications decreased to 9.5 percent from 9.6 percent and the VA share to 11.2 percent from 11.5 percent. The USDA volume was unchanged at an 0.5 percent share. The average origination balance of mortgages rose from $337,800 to $340,200 during the week while the balance of purchase mortgages dropped to $398,700 from $400,000.  

The average contract interest rate for 30-year fixed-rate mortgages (FRM) with balances at or below the conforming limit of $548,250 increased to 3.18 percent from 3.11 percent. Points rose to 0.48 from  0.36 and the effective rate increased to 3.32 percent.   

The rate for jumbo 30-year FRM, loans with balances greater than the $548,250 conforming limit, increased to 3.26 percent from 3.20 percent.  Points ticked down from 0.46 to 0.44 and the effective rate grew to 3.39 percent. 

Thirty-year FRM-backed FRM had an average rate of 3.21 percent with 0.34 point. The prior week the average was 3.14 percent with 0.33 point. The effective rate was 3.30 percent.  

The rate for 15-year FRM was 2.58 percent with 0.39 point, up from 2.49 percent with 0.25 point. The effective rate was 2.67 percent.  

The average rate for 5/1 adjustable rate mortgages (ARMs) was unchanged at 2.69 percent, with points decreasing to 0.26 from 0.38. The effective rate dipped to 2.78 percent.  The ARM share of activity increased to 3.9 percent of total applications from 3.8 percent a week earlier.

MBA's Weekly Mortgage Applications Survey has been conducted since 1990 and covers over 75 percent of all U.S. retail residential applications Respondents include mortgage bankers, commercial banks, and thrifts. Base period and value for all indexes is March 16, 1990=100 and interest rate information is based on loans with an 80 percent loan-to-value ratio and points that include the origination fee.

MBA's latest Forbearance and Call Volume Survey put the total number of loans now in forbearance at 3.93 percent of servicers' portfolio volume, down 11 basis points from the prior week. MBA estimates that 2 million homeowners remain in forbearance plans with 10.6 percent in the initial plan stage, while 83.5 percent on in an extension. The remaining 5.9 percent are re-entries to the program.

The share of Fannie Mae and Freddie Mac loans in forbearance decreased 4 basis points to 2.05 percent and the Ginnie Mae (FHA and VA) loan share declined 7 basis points to 5.15 percent. The largest improvement was in the share of forborne portfolio loans and private-label securities (PLS) which fell 35 basis points to 7.98 percent. The share of loans serviced by independent mortgage bank (IMB) servicers decreased 16 basis points to 4.05 percent and those served by depository servicers declined 3 basis points to 4.16 percent.

"The share of loans in forbearance declined for the 16th straight week, with declines across almost every loan category," said Mike Fratantoni, MBA's Senior Vice President and Chief Economist. "New forbearance requests, at 4 basis points, remained at an extremely low level. More than 44 percent of borrowers who exited this week used a deferral plan, highlighting the importance of this option."

Added Fratantoni, "As more homeowners reach the end of their forbearance term, we should continue to see the share in forbearance decline. The improving job market and strong housing market are providing support for those who do exit."

MBA's latest Forbearance and Call Volume Survey covers the period from June 7 through June 13, 2021. This 74 percent of the first-mortgage servicing market of 37.0 million loans.