Interest Rates Rise, Mortgage Applications Decline

August 23, 2012 (Chris Moore)

Rising interest rates led to a nine percent decline in mortgage refinance applications last week pushing the total number of applications down for the third consecutive week according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending August 17th, 2012.

The Market Composite Index, a measure of mortgage loan application volume including purchase applications and refinance applications, fell a seasonally adjusted 7.4 percent from the previous week and follows a 4.5 percent decline the week before.

On an unadjusted basis, the Index fell by eight percent from the previous week and follows a 4.7 percent decline two weeks ago.

Purchase Applications:

The seasonally adjusted Purchase Index increased 0.9 percent from the previous week after declining two percent the week before, while the unadjusted Purchase Index declined by 0.9 percent but was still three percent higher than the same week a year ago.

Refinance Applications:

The Refinance Index decreased nine percent from the previous week after declining by five percent the week before. The refinance share of mortgage activity fell to 80 percent of total applications from 81 percent the previous week.

HARP loans made up 24 percent of all refinance activity last week, unchanged from the week before.

Mortgage Interest Rates:

Average Contract Mortgages Rates
(80% loan-to-value)

Type of
Loan

Interest Rate (%)

Points

Effective Rate

Current

Previous

Current

Previous

30-Year FRM Conforming
($417,500 or less)

3.86

3.76

0.42

0.47

Increased

30-Year FRM Non-Conforming
($417,501 or more)

4.11

4.03

0.42

0.27

Increased

15-Year FRM

3.15

3.12

0.44

0.40

Increased

FHA 30-Year

3.62

3.53

0.50

0.49

Increased

5/1 ARM

2.74

2.73

0.38

0.36

Increased

The adjustable-rate mortgage (ARM) share of activity remained at just over four percent of total applications.

Tags: MBA, home purchase applications, mortgage rates, fixed rate mortgage, adjustable rate mortgage, refinance, interest rate

Sources:
Mortgage Bankers Association