Mortgage interest rates continue to rise and that is not only impacting application volume for the preceding week, but likely hurting current volume as well as a pair of real-time indicators show this upward movement continuing.
For the week ended May 24, overall application volume fell 8.8% from
The unadjusted Refinance Index was down 12% compared to the prior week, the largest week-to-week decline this year. This index is at its lowest point since December 2012. The share of refinancings is at 71%, a decline of three percentage points and the lowest it has been since April 2012.
Where the rising rates might be having a positive impact is on purchase business. The seasonally adjusted Purchase Index increased 3% from one week earlier. The unadjusted Purchase Index was 14% higher than the same week one year ago.
Quicken Loans chief economist Bob Walters gave the following advice: “Mortgage rates have jumped more in the past week than they have in years. Consumers who are still on the fence about refinancing need to act now.”
Stronger economic data and the “increasing chance” that the
HSH.com’s weekly mortgage radar found rates for the 30-year fixed-rate mortgage increased 12 basis points during the week ended Tuesday, to 3.8%.
Keith Gumbinger, vice president of HSH.com, commented, "Good news on home price gains and improving consumer moods released Tuesday exacerbated the investor move out of bonds and into stocks.
"The better and stronger any fresh economic news is, the greater the likelihood that an exit from QE will begin sooner rather than later. However, higher interest rates in the market may slow home buying, especially refinancing. In turn, this could slow the economy, so it will likely take several more months of solid reports to cause the Fed to move."
Zillow’s Mortgage Rate Ticker showed a 13 basis point rise for the 30-year FRM as of Tuesday morning over the previous week to 3.71%.
“Now at 12-month highs, we expect rates to remain stable in the near term, but new direction from the Fed and employment figures could boost rates significantly,” 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 3.9%, an increase of 12 basis points and the highest it has been in one year. Federal Housing Administration-insured loans had an average contract rate for the week of 3.62%, up nine basis points from the previous week.
Jumbo 30-year FRMs saw the average contract rate rise 14 basis points to 4.07%. The MBA said the rate for the 15-year FRM increased by 14 basis points to 3.1%.
The share of adjustable-rate mortgages was 5% of the week’s loan applications, and the average contract rate for the 5/1 ARM remained unchanged at 2.6%.
