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Uptick in Rates Provokes a Big Drop in Volume
There was a significant drop in mortgage applications, especially forrnrefinancing, during the week ended June 13 the Mortgage Bankers Associationrn(MBA) reported today. Results of MBA’srnWeekly Mortgage Applications Survey showed a decline in the Market CompositernIndex, a measure of application volume, of 9.2 percent from the previous weekrnon a seasonally adjusted basis and 10 percent unadjusted.</p
Refinancing slipped from a 54 percent share of all mortgage applicationsrnduring the week ended June 6 to a 52 percent share and the Refinancing Index fell<b13 percent compared to the earlier week. rnThe seasonally adjusted Purchase Index decreased 5 percent. On an unadjusted basis applications forrnpurchase mortgages were down 6 percent week-over-week and were 15 percent lowerrnthan during the same week in 2013.</p
Refinance Index vs 30 Yr Fixed</p
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Purchase Index vs 30 Yr Fixed</b</p
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“Interest rates increasedrnrelative to the previousrnweek, as incoming economicrndata continues to suggest a pickup in the pace of growth,”rnsaid Mike Fratantoni, MBA’s Chief Economist.rn”Although the average rate for the week was up only a few basis points, the increase was matchedrnby a large drop in refinance volume, and purchase application volume also declined. Some lenders continuernto report that theyrnhave pre-approved borrowers who have been unablernto find a property given the tight inventoryrnin certain markets.”</p
As Fratantonirnpointed out, interest rates moved up slightly on all products with the 15-yearrnfixed-rate mortgage (FRM) making the largest move with an increase of 7 basisrnpoint to 3.50 percent. Points decreasedrnto 0.16 from 0.22 and the effective rate increased. </p
The average contract interest rate for 30-year</bfixed-rate mortgages (FRM) with conforming loan balances ($417,000 or less) increased to 4.36 percent from 4.34 percent, with points increasing to 0.24 from 0.16. The effective rate increased from the previous week.</p
Jumbo 30-year FRM (loan balances greater than $417,000) increased to 4.32 percent from 4.27 percent. Points decreased to 0.09 from 0.12 but the effective rate still increased. </p
Thirty-year FHA-backed FRM saw am average raternincrease of one basis point to 4.07 percent. Points decreased to -0.39 from -0.03 andrnthe effective rate decreased.</p
The average contractrninterest rate for 5/1 adjustable rate mortgages (ARMs) increasedrnto 3.20 percent from 3.18 percent, with points decreasing to 0.27 from 0.35. The effective rate remained unchanged from last week. ARMsrncontinued to hold an 8 percent share of mortgage applications as they have forrnnearly all of 2014.</p
MBA’s survey coversrnover 75 percentrnof all U.S. retail residential mortgagernapplications and has been conducted since 1990.rnRespondents include mortgagernbankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100rnand information on rates assumes a loan with an 80 percent loan to balancernratio. Points include the originationrnfee.
All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of MortgageNewsDaily.com is prohibited.
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Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.
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