Rising Rates Cause Mortgage Applications to Fall For a Second Straight Week

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Mortgage application volume fell for a second straight week during the week ended April 12, but the decrease was due mainly to a sharp drop-off in refinance activity resulting from a jump in mortgage rates.

Total volume fell 3.5% on an adjusted basis compared with the previous week, according to Mortgage Bankers Association’s (MBA) Weekly Applications Survey.

The previous week, total volume fell 5.6%, according to the survey, which covers about 75% of the mortgage market.

Applications for refinances fell 8% from the previous week while applications for purchases increased 1%.

On an unadjusted basis, total volume fell 3% compared with the previous week. Applications for purchases increased 2% on an unadjusted basis and were 7% higher compared with the same week one year earlier.

“With mortgage rates up for a second week in a row, it’s no surprise that refinances slid eight percent and average loan sizes dropped back closer to normal levels,” says Joel Kan, associate vice president of economic and industry forecasting for the MBA, in a statement. “Purchase activity remained strong and increased slightly, reaching its highest level since April 2010. The spring buying season continues to be robust, with activity more than seven percent higher than a year ago and up year-over-year for the ninth straight week.”

The refinance share of mortgage activity decreased to 41.5% of total applications, down from 44.1% the previous week.

The adjustable-rate mortgage (ARM) share of activity decreased to 6.6% of total applications.

The average rate for a 30-year fixed-rate mortgage, based on closings, was 4.44%, up from 4.40%.

The average rate for a 5/1 ARM increased to 3.88%, up from 3.78%.

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