Both mortgage applications and refinance activity decreased about 5 percent last week, likely due to rising interest rates, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey.
For the week ending June 26, mortgage applications decreased 4.7 percent and the refinance index decreased 5 percent from the preceding week.
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Adjustable-rate mortgage applications represented 7 percent of total applications, unchanged from the previous week. The refinance share of mortgage activity decreased to 48.9 percent of total applications, down slightly from 49 percent the week prior.
Government loan programs reported mixed results, according to the survey:
- The FHA share of total applications increased to 14 percent from 13.9 percent the week prior.
- The VA share of total applications decreased to 10.8 percent from 10.9 percent the week prior.
- The USDA share of total applications increased to 1 percent from 0.9 percent the week prior.
The activity decrease is likely due to across-the-board interest rate increases:
- The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.26 percent from 4.19 percent.
- The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to 4.21 percent.
- The average contract interest rate for 15-year fixed-rate mortgages increased to 3.44 percent from 3.38 percent.
All of these rates are at their highest levels since October 2014, the MBA noted.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 4.04 percent from 3.96 percent, its highest level since September 2014.
Although the activity decreases were minimal, and many other reports are showing an uptick in homebuying, many economists have predicted a falloff in the housing market due to expected rising interest rates. It will be interesting to see how these numbers fare next week.
MBA’s survey covers 75 percent of all U.S. retail residential mortgage applications. Respondents include mortgage bankers, commercial banks and thrifts.
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