Housing
Mortgage Applications Drop as Loan Rates Start to Climb
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The Mortgage Bankers Association (MBA) released its weekly report on mortgage applications Wednesday morning, noting a decline of 1.8% in the group’s seasonally adjusted composite index for the week ending September 7. The decline marks the third consecutive weekly drop in new applications. The MBA included an adjustment to this report to account for the Labor Day holiday.
Mortgage loan rates for top-tier borrowers stayed put last week at 4.65% for a 30-year fixed-rate loan, according to Mortgage News Daily. Rates jumped on Monday to 4.72%, where they remained through Tuesday’s close as well. Matthew Graham noted that weakness in demand for bonds is pushing rates up and that over the next five days “rates could easily move to long-term highs” last seen in 2011. The yield on 10-year Treasury bonds closed the week at around 2.86%, flat week over week, and jumped to close at 2.98% on both Monday and Tuesday. The differential between the 10-year yield and the two-year yield (the yield curve) remained at 23 basis points.
On an unadjusted basis, the MBA’s composite index fell by 13% week over week. The seasonally adjusted purchase index increased by 1% compared with the week ended August 31. The unadjusted purchase index dropped by 11% for the week and was 4% higher year over year.
The MBA’s refinance index fell by 6% week over week and the percentage of all new applications that were seeking refinancing decreased from 38.9% to 37.8%.
Adjustable rate mortgage loans accounted for 6.4% of all applications, up from 6.4% in the prior week.
According to the MBA, last week’s average mortgage loan rate for a conforming 30-year fixed-rate mortgage rose from 4.80% to 4.84%. The rate for a jumbo 30-year fixed-rate mortgage increased from 4.67% to 4.72%. The average interest rate for a 15-year fixed-rate mortgage rose from 4.23% to 4.28%.
The contract interest rate for a 5/1 adjustable rate mortgage loan decreased from 4.09% to 4.07%. Rates on a 30-year FHA-backed fixed-rate loan rose from 4.79% to 4.84%.
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