Rising Rates Finally Impact Application Activity
Mortgage application volume has declined from the previous week for only the second time in 2013, according to the Mortgage Bankers Association. Its Market Composite Index was down 6.4% on a seasonally adjusted basis for the week ended Feb. 8.
Application volume has been up most weeks so far this year even though the average contract rate on the 30-year fixed-rate mortgage has increased for eight out of the last nine weeks. MBA noted this rate is at its highest point since last September.
Quicken Loans chief economist Bob Walters said, “While you try not to read too deeply into week-to-week changes, the truth is many homeowners may simply be deciding to play the market and wait for their home to appreciate before putting it up for sale. Despite the drop in applications, we have seen anecdotal evidence of homes selling very quickly after entering the market.”
The Refinance Index, which is not adjusted, was down 6% from the previous week. The seasonally adjusted purchase index was down 10% over the same time period. When compared with the same week last year on an unadjusted basis, the purchase index is 15% higher.
Refi applications made up 78% of all new apps, same as the prior week. The HARP share of refi apps remained at 28%.
The average contract rate for the 30-year conforming FRM (MBA defines this as a loan with a balance of $417,500 or under) increased two basis points to 3.75%. Federal Housing Administration-insured loans had an average contract rate for the week of 3.53%, unchanged from the prior week.
Jumbo 30-year FRMs also saw its average contract rate reaching the highest point since September 2012, up two basis points to 3.98%. The 15-year FRM also hit its high point since last September, up one basis point to 3.01%.
Adjustable-rate mortgages made up a mere 4% of the week’s loan applications, but the average contract rate for the 5/1 ARM declined by six basis points to 2.66%.