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Refinance Applications Plummet as Rates Move Higher

by devteam May 29th, 2013 | Share

Waning enthusiasm for refinancing againrndrove the volume of mortgage applications down during the week ended Mayrn24.  The Mortgage Bankers Associationrn(MBA) reported that its Market Composite Index, a measure of mortgagernapplication volume, was down 8.8 percent on a seasonally adjusted basis fromrnthe week ended May 17 and 9 percent on an unadjusted basis.</p

Note:  This report shows rate movements from the previous week.  Rates moved sharply higher again yesterday, READ:  [ Mortgage Rates Vault Catastrophically Higher : Tuesday, May 28, 2013 ]</p

The MBA’s Refinancing Index had thernlargest negative move of the year, falling 12 percent from the volume thernprevious week to its lowest level since last December.   The refinancing share of applications droppedrnto 71 percent from 74 percent, the lowest level since April 2012.  </p

Applications for purchase mortgages did risernduring the week; the Purchase Index was up 3 percent on a seasonally adjustedrnbasis from the previous week and 2 percent on an unadjusted basis.  The unadjusted version of the Index was 14rnpercent higher than during the same week in 2012.       </p

“Refinancernapplications fell for the third straight week bringing the refinance index tornits lowest level since December 2012 as mortgage rates increased to theirrnhighest level in a year,” said Mike Fratantoni, MBA’s Vice President ofrnResearch and Economics. “Rates rose in response to stronger economic data andrnan increasing chance that the Fed may soon begin to taper their asset purchases.”</p

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

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Refinance Index vs 30 Yr Fixed</p

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

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Contract and effective interest rates increased during thernweek for all fixed rate mortgages (FRM). rnThe average rate for 30-year FRM with conforming loan balances ofrn$417,500 or less increased 12 basis points to 3.90 percent, the highest raternsince May 2012.  Points were unchanged atrn0.39.  The jumbo version of the 30-yearrnFRM (balances over $417,500) increased from 3.93 percent with 0.36 point torn4.07 percent with 0.27 point.  This wasrnthe highest rate since August 2012.</p

The averagerncontract interest rate for FHA-backed 30-year FRM increased to 3.62 percent fromrn3.53 percent with points increasing to 0.27 from 0.13.  This was the highest rate for an FHA loan sincernlast August. </p

The raternfor 15-year FRM increased to 3.10 percent with 0.30 point from 2.96 percentrnwith 0.32 point.  The new rate was alsornthe highest for a 15-year FRM since last August.  </p

The 5/1rnadjustable rate mortgage (ARM) remained unchanged at 2.60 percent; pointsrnincreased from 0.23 to 0.24 but the effective rate declined.  ARMs of all types had a 5 percent share ofrnmortgage applications during the week, a slight increase from the previousrnperiod.  </p

The MBA’s WeeklyrnMortgage Applications Survey is conducted among mortgage bankers, commercialrnbanks, and thrifts.  It has beenrnconducted since 1990 and covers over 75 percent of all U.S. retail residentialrnmortgage applications.   Base period and value for all indexes is Marchrn16, 1990=100 and interest rate data is for loans with 80 percent loan to valuernratios.  Points include thernorigination fee.

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

About the Author

devteam

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

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