Mortgage applications plummeted 13.5 percent, while the refinance share decreased to 57 percent of total activity from 61 percent the previous week — its lowest level since April 2010, according to data released Wednesday by the Mortgage Bankers Association.
The bankers’ Market Composite Index, a measure of overall loan application volume, decreased 13.5 percent on a seasonally-adjusted basis last week, from one week earlier.
This week’s results included an adjustment for the Labor Day holiday.
But its the group’s Refinance Index component that tells the story behind the series of layoffs by the big banks in their mortgage businesses. The MBA’s ReFi index decreased 20 percent from the previous week.
The Refinance Index has fallen 71 percent from its recent peak the week of May 3, 2013, and is at the lowest level since June 2009.
In May, mortgage interest rates started climbing on announcement from the Federal Reserve that it would likely begin its tapering of massive bond purchases later this year. Most Wall Street analysts predict the Fed will initiate the beginning of its stimulus pullback this month or next.
The adjustable-rate mortgage (ARM) share of activity was unchanged at 7 percent of total applications, the MBA said.
The HARP share of refinance applications — referring to the government-sponsored Home Affordable Refinance Program — was unchanged from the prior week at 38 percent.
Here is the MBA’s overview of average contract rates:
- The average contract interest rate for 30-year fixed-rate mortgages, with conforming loan balances ($417,000 or less), increased to 4.80 percent from 4.73 percent for 80 percent loan-to-value ratio (LTV) loans.
- The average contract interest rate for 30-year fixed-rate mortgages, with jumbo loan balances (greater than $417,000), increased to 4.84 percent from 4.71 percent for 80 percent LTV loans.
- The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA, increased to 4.56 percent from 4.48 percent for 80 percent LTV loans.
- The average contract interest rate for 15-year fixed-rate mortgages increased to 3.83 percent from 3.75 percent for 80 percent LTV loans.
- The average contract interest rate for 5/1 ARMs increased to 3.59 percent from 3.49 percent for 80 percent LTV loans.