Refinancing Surge Cools as Rates Rise

The resurgence enjoyed by refinancing over the last few weeks subsided arnbit in the face of rising interest rates during the week ended October 31.   ThernMortgage Bankers Association (MBA) reported that its Market Composite Index, arnmeasure of mortgage loan application volume fell by 2.6 percent on a seasonallyrnadjusted basis from the week before and by 3 percent on an unadjusted basis.</p

The Refinancing Index was down 6 percent from the week ended October 24rnand the refinancing share of all applications eased back from 65 percent to 63rnpercent. </p

Refinance Index vs 30 Yr Fixed</p

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The seasonally adjustedrnPurchase Index increased 3 percent from one week early and was 1 percent higherrnon an unadjusted basis but was still 13 percent below its level one year earlier.  </p

Purchase Index vs 30 Yr Fixed</p

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MBA said the share of mortgages originated for FHA backing increased torn9.5 percent from 8.9 percent the week before while VA mortgages were unchangedrnat a 10.7 percent share.  Just under 1rnpercent of applications were for USDA guaranteed loans.rn</p

Conforming 30-year fixed-rate mortgages (FRM) with balances of $417,000rnor less had a contract interest rate that averaged 4.17 percent with 0.22 pointrnand an effective rate that also increased. rnThe previous week the rate had been 4.13 percent with 0.21 point.</p

The jumbo 30-year FRM with balances over $417,000 held steady at anrninterest rate of 4.13 percent.  Pointsrndecreased to 0.11 from 0.13 and the effective rate went down.</p

The averagerncontract interest rate for 30-year FRM backed by the FHA remained unchanged at 3.84 percent, with points increasing to 0.34 from 0.16.  The effectivernrate increased from last week.</p

Fifteen-year FRMrnsaw an average rate increase of 10 basis points, rising to 3.38 percent.  Points increased from 0.24 to 0.31 and therneffective rate also increased.  </p

Applications for adjustable raternmortgages (ARM) fell from an 8.2 percent share the previous week to a 7.4rnpercent share.  The average contractrninterest rate for 5/1 ARMs increased to 3.08 percent from 2.94 percent, with points decreasing to 0.33 from 0.43.  The effective rate increased compared to the previous week.</p

MBA compiles itsrnapplication and interest rate data from its Weekly Mortgage Applications Surveyrnwhich it has conducted since 1990.  The survey coversrnover 75 percentrnof all U.S. retail residential mortgagernapplications through respondents which include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100rnand interest rate data assumes mortgages with 80 percent loan to value ratiornand points which include the origination fee.

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