US mortgage refinancing activity fell last week after reaching the highest level since March 2020. Mortgage Bankers Association (MBA) data showed that the refinance index decreased by 4.2 percent in week ended February 5, 2021 (v +11.4 percent w/w prior). However, US mortgage refinancing activity was still up 19.6 percent year to date.
Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting, said “with the 30-year fixed rate increasing to 2.96 percent – a high not seen since last November – refinances declined, and their share of total applications dipped to the lowest level in three months.”
On the positive side, he added “government refinance applications did buck the trend and increase, and overall activity was still 46 percent higher than a year ago. Demand for refinances is still very strong this winter.” The increase in refinancing activity will be another tailwind for households after the Congress passed a $900 billion stimulus in December. It reinforce my view that US economic growth should exceed expectations in 2021.
In the meantime, Joel Kan underlined “purchase applications cooled the first week of February, but homebuyers are still very active. Purchase activity was 17 percent higher than last year, and the average purchase loan size continued to increase, reaching another survey high of $402,200, as the higher-priced segment of the market continues to perform well.” It kept rising supported by limited housing inventory and accelerating home price growth.