Refis down 20% from year-ago levels as mortgage applications decline overall
Mortgage rates that are on the rise in tandem with an economic recovery has dampened borrower activity, even with first season of home buying In progress.
The Mortgage Bankers Association Composite Market Index – a measure of the volume of loan applications – fell 5.1% from the previous week After adjusting for seasonal variations. The seasonally adjusted refinancing index fell 5.3%, followed by the purchases index at 4.6% on a week-over-week basis. Overall, refinancing represented 60.3% of application activity, compared to 60.6% the previous week.
Refinancing requests fell for the fifth week in a row, dropping 30% in the past 10 weeks and being 20.4% lower than a year ago. Although buying volume fell in the short term, it was still 50.8% higher than the previous year.
“The rapid recovery of the economy and improving the labor market generate a significant demand for the purchase of homes, but activity in recent weeks has been limited by house price growth and extremely low inventory“Joel Kan, associate vice president of economic and industrial forecasting at the MBA, said in a press release.
The activity share of variable rate mortgages rose again to 3.7% from 3.4% the previous week.
By product type, Federal Housing Administration mortgages accounted for 10.2% of applications this week, compared to 11.3% week-over-week. Loans to veterans jumped to 13.8% from 10.3%, while the share of the US Department of Agriculture / Rural Housing Service edged up from 0.4% to 0.5%.
Average contractual interest rates have increased for all types of loans. 30-year fixed rate mortgages with compliant loan balances – $ 548,250 or less – fell from 3.33% to 3.36%. Jumbo loans – those worth over $ 548,250 – fell from 3.34% to 3.41% and FHA-insured mortgages fell from 3.26% to 3.36%. The 15-year FRM rate fell from 2.71% to 2.74% and the 5/1 ARM rate fell from 2.85% to 2.92%, with points falling from 0.4 to 0.46 .