Mortgage Applications Fall in Face of Rising Rates

by devteam May 15th, 2013 | Share

Applications for both purchasing and refinancing homesrndropped during the week ended May 10 as interest rates reversed the downwardrntrend of the previous few weeks.  Accordingrnto the Weekly Mortgage Applications Survey conducted by the Mortgage BankersrnAssociation, the Market Composite Index, a measure of application activity,rnrose 7.3 percent on a seasonally adjusted basis from the week ended May 3 andrnwas up 7 percent on a non-adjusted basis.</p

The Refinance Index fell 8 percent from the previousrnweek and the seasonally adjusted Purchase Index was down 4 percent.  The unadjusted Purchase Index also lost 4rnpercent on a week-over-week basis but was 10 percent higher than in the samernweek in 2012.   Applications forrnrefinancing made up 76 percent of the total, the same share as in the previousrnweek.</p

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

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


Refinance Index vs 30 Yr Fixed</p

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


MBA said contract interest rates for every loan typernit tracks rose during the week and the effective rate rose for most.  The contract rate for conforming 30-yearrnfixed-rate mortgages (FRM) (balances of $417,500 or less) increased for thernfirst time in eight weeks to an average of 3.67 percent with 0.41 point.  The previous week the average was 3.59rnpercent with 0.33 point.   </p

The rate for jumbo 30-year FRM increased to 3.87rnpercent from 3.79 percent and points increased from 0.20 to 0.25.  Jumbo loans have balances exceeding $417,500.  The average rate for 15-year FRM increasedrnfrom 2.81 percent with 0.29 point to 2.88 percent with 0.31 point.</p

Thirty-year FRM backed by FHA had a rate thatrnincreased by 8 basis points to 3.43 percent while points decreased to 0.16 fromrn0.57.  This was the sole product forrnwhich the effective rate decreased.</p

Applications for adjustable rate mortgages (ARMs) remainedrnat a 4 percent share of all activity during the week.  The average rate for the 5/1 ARM increased twornbasis points to 2.55 percent and points increased from 0.15 to 0.23.  </p

MBA’s survey has been conducted since 1990 andrncovers over 75 percent of all U.S. retail residential mortgagernapplications.  Base period and value forrnall indices is March 16, 1990+100.  Ratesrnquoted are for loans with an 80 percent loan-to-value ratio and points includernthe origination fee.

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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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