Rate Increases Take Toll on Refi Apps

Applications for refinancing cratered last week, reaching their lowestrnlevel in four months according to the Mortgage Bankers Association’s (MBA’s) WeeklyrnMortgage Applications Survey. MBA’s Refinance Index dropped by 8 percent duringrnthe week ended May 1, the largest single-week decrease in over two months, tornits lowest level since January.  Thernrefinancing share of applications was at 53 percent for the week, twornpercentage points lower than the previous week.</p

Applications forrnhome purchases did increase but not by enough to offset the decline inrnrefinancing.  MBA’s Market CompositernIndex, a measure of overall mortgage application volume fell 4.6 percent fromrnthe week ended April 24 on a seasonally adjusted basis and was down 4.0 percentrnon an unadjusted basis.  The PurchasernIndex increased by 1 percent from the previous week reaching its highest seasonallyrnadjusted level since June 2013.  It wasrnup 2 percent on an unadjusted basis was 12 percent higher than during the samernweek in 2015. The averagernsize of a purchase loan rose to a survey high of $297,400. </p

Refinance Index vs 30 Yr Fixed</p

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

</p

Purchase Index vs 30 Yr Fixed</p

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

</p

 Mike Fratantoni MBA’s Chief Economist said, “Refinance volumerndropped last week as rates in the US increased sharply towards the end of the week, with signs of recoveryrnin Europe liftingrnrates across the globe. Purchasernactivity increased slightlyrnover thernweek, and the average loan amount for a purchase application reached a recordrnhigh, a sign that the mix of purchase activityrnis still skewed toward higher priced homes.” </p

The FHA share of total applications increased to 14.0 percentrncompared to 13.7 percent from the previous week while the VA share rosernto 11.9 percent from 11.3 percent. The USDA share of total applications was unchanged at 0.8rnpercent.</p

Rates were higher across the board forrnfixed rate mortgages and all mortgage types saw an increase in effectivernrates.  The average contract interestrnrate for 30-year fixed-rate mortgages (FRM) with conforming loan balances ($417,000 or less) increased to 3.93 percentrnfrom 3.85 percent, with points remaining at 0.35. </p

Jumbo 30-year FRM saw an average rate increasernof 9 basis points to 3.91 percent. rnPoints dipped from 0.31 to 0.24.</p

The average contract interest rate forrn30-year FRM backed by the FHA increased to 3.70 percent from 3.66 percent.rnPoints increased to 0.21 from 0.16.</p

The average contractrninterest rate for 15-year fixed-raternmortgages increased to 3.19 percentrnfrom 3.14 percent, with points easingrnto 0.30 from 0.31.  </p

The average rate for 5/1 adjustable raternmortgages (ARMs) dipped one basis point to 2.87 percent and the effective raternincreased along with a .05 increase in points to 0.33.  Still the share of mortgage applications forrnARMs rose from 5.7 to 6.1 percent, the first time the share of these loans hadrnbreached 6.0 percent this year. </p

MBA’s survey, which has been conductedrnsince 1990, covers over 75 percent of all U.S. retail residential mortgage applications.  Respondents include mortgage bankers,rncommercial banks and thrifts. The base period and value for all mortgagernapplication indexes is March 16, 1990=100rnand interest rate quotes presume an 80 percent loan to value ratio.  Points include the origination fee.

All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of MortgageNewsDaily.com is prohibited.