Mortgage Loan Rates Post New 5-Month Highs

The Mortgage Bankers Association (MBA) released its weekly report on mortgage applications Wednesday morning, noting a week-over-week decrease of 1.2% in the group’s seasonally adjusted composite index for the week ending November 4. Mortgage loan rates rose on three types of loans over the past week.

On an unadjusted basis, the composite index decreased by 2% week over week. The seasonally adjusted purchase index increased by 1% compared with the week ended October 28. The unadjusted purchase index decreased 1% for the week and is now 11% higher year over year.

The MBA’s refinance index decreased by 3% week over week, and the percentage of all new applications that were seeking refinancing dropped from 62.7% to 62.3%.

Adjustable rate mortgage loans accounted for 4.5% of all applications, up 4.4% from the previous week.

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According to Mortgage News Daily, mortgage reached a five-month high yesterday ahead of the elections. Matthew Graham put the Trump victory into perspective for the mortgage market:

The equations were very simple.  Clinton = status quo, better for stocks, worse for bonds.  And Trump = uncertainty, better for bonds, worse for stocks.  When news would break that helped Trump’s chances, bonds would rally and stocks would fall.  When news broke that put Clinton back in the lead, the trade would reverse. … Unfortunately for bond markets, the election is a vastly smaller concern than the other big-ticket events on the horizon.  The biggest ticket of them all is, was, and will be the European Central Bank Announcement in early December. That’s the one that might spark a European taper tantrum. Traders couldn’t care much less about which one of the two evils got elected when 100’s of billions in annual bond buying is at stake. As such, it’s not a huge surprise to see bonds bounce at the pivot point consistently associated with ECB tapering risks (notice the recent bounces begin in Sep/Oct when ECB headlines were moving markets).

According to the MBA, last week’s average mortgage loan rate for a conforming 30-year fixed-rate mortgage increased from 3.75% to 3.77%. The rate for a jumbo 30-year fixed-rate mortgage rose from 3.74% to 3.75%. The average interest rate for a 15-year fixed-rate mortgage decreased from 3.04% to 3.03%.

The contract interest rate for a 5/1 adjustable rate mortgage loan decreased from 2.97% to 2.92%. Rates on a 30-year FHA-backed fixed-rate loan rose from 3.59% to 3.61%.

All rates except the 5/1 ARM and the 15-year fixed are their highest levels since June.

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