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Rising Rates Taking Consistent Toll on Purchase Demand

by devteam July 10th, 2013 | Share

Mortgagernapplication activity continued to slide last week, down 4 percent onrna seasonally adjusted basis from the week before, the fourth straightrnweek the Mortgage Bankers Association’s (MBA’s) Market CompositernIndex has fallen. The index, a measure of application volume,rncontained an additional adjustment to account for the July 4 holiday.rn On an unadjusted basis the index was down 23 percent from the weekrnended June 28. </p

ThernRefinance Index was down 4 percent from the previous week andrnrefinancing accounted for 64 percent of total applications, a slightrnweek-over-week decline. Thirty-five percent of refinancingrnapplications were for Home Affordable Refinancing loans, up from 34rnpercent the previous week. </p

Refinance Index vs 30 Yr Fixed</p

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

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Thernseasonally adjusted Purchase Index decreased 3 percent from one weekrnearlier. The unadjusted Purchase Index was 23 percent below that ofrnthe previous week and was 5 percent higher than the same week onernyear ago. </p

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

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

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Allrnaverage contract interest rates reported from MBA’s Weekly MortgagernApplications Survey hit near two year high levels and effective ratesrnalso all increased. The average contract rate for a 30-yearrnfixed-rate mortgages (FRM) with a balance of $417,500 or less jumpedrn10 basis points to 4.68 percent. Points rose to 0.46 from 0.43. Thernjumbo FRM (balances over $417,500) rose from 4.68 percent to 4.86rnpercent with points down from 0.38 to 0.37. The rates for bothrnconforming and jumbo FRMs were at the highest level since July 2011. </p

FHA-backedrn30-year FRM were back to September 2011 interest rate levels,rnincreasing 10 basis points to 4.37 percent. Points dropped to 0.39rnfrom 0.44.</p

Thernaverage contract rate for15-year FRM was 3.76 percent with 0.41 pointrncompared to 3.64 percent with 0.44 point the week before. This wasrnthe highest rate since July 2011.</p

Adjustablernrate mortgages drew a 7 percent share of mortgage applications duringrnthe week, down from 8 percent. The average rate for a 5/1 ARMrnincreased to its highest level since May 2011, 3.40 percent, fromrn3.33 percent. Points jumped to 0.43 from 0.31. </p

MBA’srnsurvey, which has been conducted since 1990, covers over 75 percent</bof all U.S. retail mortgage applications. Respondents includernmortgage bankers, commercial banks, and thrifts. Interest rate datarnis for loans with an 80 percent loan-to-value ratio and pointsrninclude the origination fee. The base period and value for allrnindices is March 16, 1990=100.

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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