Mortgage application volume declined for the third consecutive week, this time by 5.2% for the week ended July 1, according to the Mortgage Bankers Association. The culprit: the average rate for the 30-year fixed spiking upward 23 basis points to its highest level since mid-May. The rise comes one week after interest rates for the 30-year and 15-year fixed-rate loans were at their lowest level since last November.
"Stronger economic data towards the end of the week coupled with the end of the Fed's second round of quantitative easing helped bring mortgage rates to their highest level in over a month," said Michael Fratantoni, MBA's vice president of research and economics. "Refinance activity, already constrained by a smaller pool of eligible borrowers, declined in response to the higher rates, but purchase applications picked up appreciably in the week before the July 4 holiday."
The Refinance Index declined by 9.2%, while the seasonally adjusted Purchase Index increased 4.8% from the previous week. On an unadjusted basis, the Purchase Index is 11.7% higher than the same week in 2010.
The market share of refi applications decreased to 66.4% from 69.5% one week prior. MBA tracks activity through its proprietary application index.
The average contract interest rate for 30-year fixed-rate mortgages rose 23 basis points to 4.69% from 4.46%, with points increasing to 0.90 from 1.19 (including the origination fee) for 80% loan-to-value ratio loans.
The average contract interest rate for the 15-year FRM was up by 15 basis points, to 3.79% from 3.64%, while points fell to 0.88 from 1.11.
