E Economics

U.S. Mortgage Refinancing Index Crashed To A 6-Month Low

17 March, 2021
US mortgage refinancing


U.S. mortgage refinancing index fell five out of the last six weeks. Mortgage Bankers Association (MBA) data showed that the refinance index decreased by 3.9 percent in week ending March 12, 2021 (v -5.0 percent w/w prior) to the lowest since September 2020. As a result, U.S. mortgage refinancing applications fell 7.8 percent year to date and were down 39.1 percent compared with the same week one year ago. In this context, the refinance share of mortgage activity decreased to 62.9% of total applications from 64.5% the previous week.


US mortgage refinancing


The decline came as the 30-year mortgage rates jumped to 3.28 percent last week (up from 3.26 percent prior), which is the highest since June 2020 and up 42 basis points since the start of 2021. Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting, said “After reaching a recent high in the last week of January, the refinance index has since fallen 26 percent to its lowest level since September 2020. Rates have jumped 36 basis points since the end of January, and last week refinance activity fell across all loan types.


Concerns over the potential for higher inflation, a strong economic recovery and a massive federal government deficits have pushed Treasury yields higher. In this context, it seems that the bottom is probably behind us.


However, on the positive side, mortgage purchase applications — which are usually less sensitive to short term rate moves — jumped 1.8% over the same week and were 5.8% higher than the same week one year ago.