Mortgage Rates Rise = Drop in Applications

Mortgage interest rates bumped back over 4% last week, causing a drop in mortgage applications to refinance and purchase homes. Application volume fell 6.6% from the previous week, on a seasonally adjusted basis, according to the Mortgage Bankers Association (MBA). Refinance applications were off 7% week-to-week, after soaring in previous weeks, thanks to lower interest rates.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.13% from 4.10% last week, according to the MBA. Some borrowers were still getting loans in the 3% range just two weeks ago.

That brief drop in mortgage interest rates was a boon largely to wealthier borrowers with big home loans. Applications to refinance jumbo loans (those with balances largely above $729,000) soared almost 130 percent two weeks ago; they fell, consequently, 41 percent last week amid higher rates.

“Borrowers with jumbo loans tend to be most sensitive to changes in rates, and that sensitivity has been clearly apparent in the past few weeks with double and even triple digit percentage changes in refinance application volume for jumbo loans,” said Mike Fratantoni, MBA’s Chief Economist.

Mortgage rates today are hovering closer to 4%, but this could change if there are any unexpected comments that spook the market in today’s policy announcement by the Federal Reserve.

Related Posts Plugin for WordPress, Blogger...