Mortgage Applications Continue Tumbling as Rates Rise

by devteam June 19th, 2013 | Share

Thernrebound in mortgage application volume reported by the MortgagernBanker’s Association (MBA) last week was short lived as bothrnrefinancing and purchase activity retreated again during the weekrnended June 14. MBA’s Market Composite Index, a measure of loanrnapplication volume was down 3.3 percent on a seasonally adjustedrnbasis from the week ended June 7 and 4 percent on an unadjustedrnbasis.rn</p

Bothrnthe Refinance Index and the seasonally adjusted Purchase Index wererndown 3 percent from the previous week; the unadjusted Purchase Indexrnfell by 4 percent but was 12 percent above the index during the samernweek in 2012. Applications for refinancing made up 69 percent ofrnall mortgage applications, unchanged from the week before, and 31rnpercent of refinance applications were through the Home AffordablernRefinance Program (HARP), 2 percentage points more than the weekrnbefore. </p

Purchase Index vs 30 Yr Fixed</b</p

ChartManager.loadChart(‘purchaseappschart’, ‘PurchaseMtgAppChart’);


Refinance Index vs 30 Yr Fixed</p

ChartManager.loadChart(‘refiappschart’, ‘RefiMtgAppChart’);


Thernshare of applications for home purchase that went torngovernment-backed mortgages was 29 percent for the second week in arnrow. This is the lowest level for those applications since MBA beganrntracking them. </p

Mortgagernrates were mixed. The average contract rate for 30-year fixed-raternmortgages (FRM) with conforming balances of $417,500 or less<bincreased to 4.17 percent with 0.41 point from 4.15 percent with 0.48rnpoint, the sixth consecutive week the rate has increased and thernhighest it has been since March 2012. The effective rate alsornincreased.</p

Therncontract and effective rates for the jumbo 30-year FRM (loan balancernabove $417,500) slipped; the contract rate went from 4.25 percentrnwith 0.32 point to 4.23 percent with 0.34 point. </p

FHA-backed</b30-year FRM increased to 3.85 percent, the highest rate since Aprilrn2012, from 3.81 percent. Points decreased to 0.22 from 0.26 and therneffective rate increased.</p

Thernaverage contract rate for 15-year fixed-rate mortgages decreased torn3.30 percent from 3.32 percent, with points increasing to 0.39 fromrn0.38. The effective rate decreased from the previous week.rn</p

Thernshare of applications that went to adjustable rate mortgages (ARMS)rnremained unchanged at 7 percent during the week. The contractrninterest rate for 5/1 ARMs increased 3 basis points to 2.81 percent,rnthe highest rate since June 2012<bwithrnpoints increasing to 0.35 from 0.30. The effective rate increased. </p

Interestrnrate information is for loans with an 80 percent loan-to-value ratiornand points include the origination fee. MBA’s application data andrnrate quotes are derived from its Weekly Mortgage Application Surveyrnwhich has been conducted weekly since 1990. Respondents includernmortgage bankers, commercial banks and thrifts and covers over 75rnpercent of all U.S. retail residential mortgage applications. rnBase period and value for all indexes is March 16, 1990=100.

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About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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