Bond investors once again priced an expected taper by the Federal Reserve into their activities, driving interest rates up during the period. “The direction of rates during this holiday-impacted week had a larger effect on mortgage activity than we saw last year and continued a recent trend of weaker applications for both purchase and refinance loans,” says Quicken Loans vice president Bill Banfield.
The Refinance Index dropped 18% compared with the previous week and is now at its lowest level since the first week of September. Refis are now 63% of new applications, down from 66% one week prior.
The seasonally adjusted Purchase Index decreased 4% from one week earlier and on an unadjusted basis is 37% lower than the same week one year ago.
Rates could move up this week if economic data to be released shows positive movement, say a number of people who follow the markets, including economists at HSH.com and Zillow.
The MBA has the 30-year conforming FRM up three basis points for the period to 4.51% while rates on the 30-year FRM jumbo were up one basis point to 4.49%. For Federal Housing Administration-insured loans, the rates were up one basis point to 4.17%.
On the 15-year FRM, rates are up four basis points to 3.56%.
The rate for the 5/1 adjustable-rate mortgage is down nine basis points to 3.09%. ARMs remain at an 8% share of new loan applications.