Mortgage Loan Rates Mostly Lower Ahead of Brexit Vote

The Mortgage Bankers Association (MBA) released its report on mortgage applications Wednesday morning, noting a week-over-week increase of 2.9% in the group’s seasonally adjusted composite index for the week ending June 17. Mortgage loan rates fell on three types of loans.

On an unadjusted basis, the composite index increased by 2% week over week. The seasonally adjusted purchase index decreased by 2% compared with the week ended June 10. The unadjusted purchase index decreased by 4% for the week and is now 12% higher year over year.

The MBA’s refinance index increased by 7% week over week, and the percentage of all new applications that were seeking refinancing rose from 55.3% to 57.7%.

Adjustable rate mortgage loans accounted for 5.7% of all applications, up from 5.3% in the previous week.

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Tomorrow’s vote in the United Kingdom on whether to remain in the European Union has influenced mortgage loan rates for the past couple of weeks. Through last week demand was high for bonds, driving down yields and mortgage rates along with them. Sentiment has shifted, however, and now the more probable outcome is that Britain will remain in the EU. That has cooled demand for bonds, leading to a rise in yields and an increase in mortgage rates.

According to Mortgage News Daily, mortgage rates rose to a two-week high on Tuesday, but most of the change has come not in the loan rate itself but in upfront costs. Whatever happens in Thursday’s vote will end the uncertainty of the past several weeks and mortgage rates will respond accordingly.

According to the MBA, last week’s average mortgage loan rate for a conforming 30-year fixed-rate mortgage decreased from 3.79% to 3.76%, its lowest level since May 2013. The rate for a jumbo 30-year fixed-rate mortgage fell from 3.75% to 3.70%, its lowest point since January 2011. The average interest rate for a 15-year fixed-rate mortgage decreased from 3.06% to 3.04%.

The contract interest rate for a 5/1 adjustable rate mortgage loan rose from 2.87% to 2.92%. Rates on a 30-year FHA-backed fixed-rate loan remained unchanged at 3.61%, the lowest level since May of 2013.

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