It's Simple: Rates Rise, Mortgage Applications Fall

Mortgage application volume decreased by 4.2% on a seasonally adjusted basis for the week ended Oct. 12, according to the Mortgage Bankers Association, as there was a slight rise in the rates on the 30-year fixed-rate loan, resulting in a retreat in refinancings. The Refinance Index fell 5% for the period.

A small bit of good news was seen in the seasonally adjusted purchase index, up 1% from the previous week, reaching its highest level since June. On an unadjusted basis, the purchase index is up 12% over the same week in 2011.

The market share of refi apps fell to 82%, from 83% the previous week. However, the HARP share of refinance applications increased to 22% from 18% the prior week.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) increased by one basis point from the previous week to 3.57%, while the average contract interest rate for 30-year FHA-insured loans remained at 3.34%.

The rate for 30-year FRMs with jumbo loan balances was up seven basis points to 3.81%.

However, the average contract interest rate for 15-year FRMs set a new record low at 2.87%, as it declined for the eighth consecutive week. The rate for the 5/1 ARM was 2.59%, which tied its previous low and is a drop of one basis point from the previous week.