Mortgage Applications Dive on Higher Interest Rates

Mortgage Applications Dive on Higher Interest RatesMortgage applications decreased 7.3 percent last week from one week earlier, when activity was actually up 7 percent, according to data released Wednesday by the Mortgage Bankers Association.
The 14-point reversal came as interest rates also reversed following the positive employment report for April, which was released May 3.
Rates had been trending downward for seven straight weeks.
The bankers’ Market Composite Index, a measure of mortgage loan applications for both refinances and purchases, decreased 7.3 percent on a seasonally-adjusted basis from one week earlier. The Refinance Index also decreased 8 percent from the previous week. The seasonally-adjusted index component that only measures purchases was down 4 percent from one week earlier.
Although refinancing activity took the biggest hit, the refinance share of mortgage applications remained constant at 76 percent of total transactions from the previous week. The adjustable-rate mortgage (ARM) share of activity also remained constant at 4 percent of total applications.
After declining for seven straight weeks, the average contract interest rate for 30-year fixed-rate mortgages, with conforming loan balances ($417,500 or less), increased to 3.67 percent from 3.59 percent, for 80 percent loan-to-value ratio (LTV) loans. This rate is at its highest level since the week ending April 12, 2013.
The average contract interest rate for 30-year fixed-rate mortgages, with jumbo loan balances (greater than $417,500), increased to 3.87 percent from 3.79 percent, for 80 percent LTV loans.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA (Federal Housing Administration) increased to 3.43 percent from 3.35 percent, for 80 percent LTV loans.
The average contract interest rate for 15-year fixed-rate mortgages increased to 2.88 percent from 2.81 percent, for 80 percent LTV loans.

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