Mortgage applications jump to kick off 2021

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With mortgage rates at all-time lows, applications for home loans reached their highest level since March. Mortgage applications soared 16.7 percent from a week earlier, according to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending Jan. 8.

The previous week’s results included an adjustment for the holidays.

MBA’s refinance index increased 20 percent from the previous week and was 93 percent higher than the same week a year ago. The seasonally adjusted purchase index rose 8 percent from a week earlier and 10 percent from a year ago.

“Booming refinance activity in the first full week of 2021 caused mortgage applications to surge to their highest level since March 2020, despite most mortgage rates in the survey rising last week,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a statement. “The expectation of additional fiscal stimulus from the incoming administration, and the rollout of vaccines improving the outlook, drove Treasury yields and rates higher.”

Refinances continue to drive the mortgage market. Refis accounted for 74.8 percent of total applications, up from 73.5 percent the previous week. Meanwhile, with fixed rates at or near record lows, few borrowers are rolling the dice on adjustable-rate mortgages, or ARMs. Variable-rate mortgages decreased to just 1.6 percent of total applications.

Federal Housing Administration loans made up 9.6 percent of applications, down from 10.1 percent the previous week. VA applications increased to 15.8 percent of the total, up from 13.6 percent the week before.

Mortgage rates still flirt with record lows

The average cost of a 30-year fixed-rate mortgage dropped to 2.95 percent last week in Bankrate’s national survey of lenders, tying a record. The 15-year fixed also tied a record, dropping to 2.37 percent. Bankrate includes origination points and other fees in its figure. The 30-year fixed-rate loans in Bankrate’s survey included an average total of 0.3 discount and origination points.


Mortgage rates have been in steady decline since the coronavirus recession struck in the spring of 2020, a trend that has helped drive the surprisingly strong housing market. The continued drop in mortgage rates reflects mixed signals from the economy. The latest spike in coronavirus cases undermined hopeful signs that COVID-19 vaccines soon will curb the pandemic, and the economic recovery so far has been uneven and incomplete.

In one sign of optimism, the 10-year Treasury yield, a key indicator for mortgage rates, topped 1 percent a week ago and has stayed above that mark since. That marked the first time since March that the benchmark rate rose above 1 percent. The move was possibly spurred by Democrats’ strong showing in the Georgia runoffs for two seats in the U.S. Senate — should Democrats win control of the Senate, the logic goes, a generous stimulus bill will follow.

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Written by
Jeff Ostrowski
Senior mortgage reporter
Jeff Ostrowski covers mortgages and the housing market. Before joining Bankrate in 2020, he wrote about real estate and the economy for the Palm Beach Post and the South Florida Business Journal.
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