Mortgage Applications Decrease, Delinquencies Rise
Mortgage rates have increased due to the war and that led to fewer mortgage applications last week. And there were more delinquencies in February (something to watch in March with higher mortgage rates).
Here are two articles released this morning.
From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey
Mortgage applications decreased 10.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 20, 2026.
The Market Composite Index, a measure of mortgage loan application volume, decreased 10.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 10 percent compared with the previous week. The Refinance Index decreased 15 percent from the previous week and was 52 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 5 percent from one week earlier. The unadjusted Purchase Index decreased 5 percent compared with the previous week and was 5 percent higher than the same week one year ago.
“The threat of higher-for-longer oil prices continued to keep Treasury yields elevated, and mortgage rates finished last week higher. The 30-year fixed rate rose to 6.43 percent, more than 30 basis points higher than at the end of February and at its highest level since October 2025,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Given this period of increasing mortgage rates and diminishing refinance incentives, refinance applications decreased 15 percent as applications across all loan types declined. Purchase applications were also down last week, as higher mortgage rates, coupled with affordability constraints and economic uncertainty, pushed some potential homebuyers to the sidelines.” …
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($832,750 or less) increased to 6.43 percent from 6.30 percent, with points increasing to 0.65 from 0.63 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
The first graph shows the MBA mortgage purchase index. According to the MBA, purchase activity is down 5% from the previous week. Purchase application activity is still depressed, and near the lowest levels during the housing bust.
The second graph shows the refinance index since 1990. The refinance index increased from the bottom when mortgage rates declined, but is down from the recent peak in March.
And from Intercontinental Exchange: ICE First Look at Mortgage Performance: Prepayments Rise on Recent Refinance Activity and Serious Delinquencies Increase as Cure Rates Slow
"February saw a clear rebound in prepayment activity, with speeds rising 14% month over month and 80% year over year as the wave of refinances triggered by lower rates in January reached closing,” said Andy Walden, Head of Mortgage and Housing Market Research at ICE. “Delinquencies also edged higher, driven by seasonal increases in early-stage delinquencies and a notable rise in seriously past-due loans, though overall delinquency rates remain below pre-pandemic levels. These dynamics bear watching in the coming months, as default activity continues to trend off recent record lows."
Prepayments rebounded: The single-month mortality (SMM) rate, a measure of prepayment speed, increased by 10 basis points (bps) in February to 0.82% and was up 80% from the same time last year. The uptick follows a refinance wave driven by January rate drops.
Delinquencies edged up in February: The national delinquency rate rose by 7 bps in February to 3.72%, driven by a 4% seasonal rise in early (30-day) delinquencies and a 3% rise in seriously delinquent (90-plus day) loans. The rate is up 20 bps from the same time last year but remains 12 bps below its February 2020 pre-pandemic benchmark.
Combined serious delinquency and foreclosure volumes increased: At the end of January, 878,000 loans were in a state of severe delinquency or foreclosure. That figure is up 175,000 (25%) over the past four months, the highest since June 2022, and the highest since June 2018 when excluding the immediate effect of the pandemic. FHA loans account for roughly 80% of the recent increase.
Cure rates have slowed: The rise in seriously delinquent loans is driven primarily by a decline in cure activity rather than a spike in new defaults. While the number of new loans that have become 90-plus days delinquent over the past four months has remained roughly flat on an annual basis, cure rates among 90-plus day delinquent mortgages are down by more than 40%.
Foreclosure activity is rising off recent record lows: February saw 35,000 foreclosure starts, down 16% from January but up 7% year over year. Foreclosure sales declined 13% in the month but rose 25% year over year. The share of loans in active foreclosure remains 6 bps below pre-pandemic levels, though it rose by 4% in February and is up 25% from a year ago.
This was for February. Prepayments will slow in March with less refinance activity, and delinquencies will likely increase (but nothing like during the housing bust since most homeowners have substantial equity and low mortgage rates).