While overall application volume decreased by 3% from
Mike Fratantoni, MBA’s vice president of research and economics, commented, “Mortgage rates increased by the most in a single week since 2011, and refinance application volume dropped to its lowest level in almost two years.
“However, applications for conventional purchase loans picked up by more than 3% over the week, and total purchase applications were 16% higher than one year ago [on an unadjusted basis], indicating that homebuyers are not yet dissuaded by the increase in mortgage rates.
“Government purchase applications dropped again, likely a function of the recent increase in FHA mortgage insurance premiums.” In fact, government purchase applications were just 28%, the lowest point in the history of the survey.
The unadjusted Refinance Index was down 5% to its lowest point since November 2011 while the seasonally adjusted Purchase Index increased 2%.
Brent Nyitray, director of capital markets at iServe Residential Lending, in his morning blog post today, commented, “There has been two theories out there about the increase in rates—either the higher rates are going to put people off and they will withdraw from the market or the higher rates are going to get people off the fence, because rates and prices are going up. So far, it looks like it’s the latter.”
The share of refi apps fell to 67% from 69%; the portion of refi apps for the Home Affordable Refinance Program fell to 30% from 31%.
HSH.com’s weekly mortgage radar found rates for the 30-year fixed rate mortgage increased 34 basis points during the week ended Tuesday, to 4.4%, a result of the market’s reaction to
Keith Gumbinger, vice president of HSH.com, warned, "It's not only the Fed chairman's words pushing rates higher, but also pretty solid economic data and a rosier outlook for the future. The market is on the defensive right now, and sensitive to good news, since the stronger the economy, the faster the Fed is likely to act.
“As record low mortgage rates powered both the recovery in housing and the broader economy, it stands to reason that a slowdown in home sales is likely, should rates remain near these levels for long."
The 30-year fixed mortgage rate on Zillow Mortgage Marketplace was up 50 basis points to 4.38% as of Tuesday afternoon.
"This coming week, we expect rates will be volatile as the market recalibrates and determines whether we've reached a new plateau near 4.5% or whether this week's rate spike was an overreaction that warrants a downward adjustment,” said Erin Lantz, director of Zillow Mortgage Marketplace.
According to the MBA application survey, the average contract rate for the 30-year conforming FRM (MBA defines this as a loan with a balance of $417,500 or under) for the survey period is 4.46%, an increase of 29 basis points and the highest it has been since August 2011. Federal Housing Administration-insured loans had an average contract rate for the week of 4.20%, up 35 basis points from the previous week.
Jumbo 30-year FRMs saw the average contract rate rise 29 basis points to 4.52%. The MBA said the rate for the 15-year FRM increased by 25 basis points to 3.55%.
The share of adjustable-rate mortgages was 7% of the week’s loan applications, and the average contract rate for the 5/1 ARM was up 25 basis points to 3.05%.
