Rising Mortgage Rates Dent Home Loans Again

January 5, 2017 | Comments Off on Rising Mortgage Rates Dent Home Loans Again

Rising mortgage rates continue to shoulder most of the blame for the decrease in mortgage applications in recent weeks. Total mortgage applications, including for refinancings and home purchases, dropped 4 percent on a seasonally adjusted week-over-week basis, the Mortgage Bankers Association reported Wednesday.

Broken out, applications for refinancing fell 4 percent last week. Refinancers tend to be particularly rate-sensitive, and even the slightest rise in rates could lessen incentive for homeowners to refinance.

Refinance applications are now 12 percent lower than a year ago, the MBA reports.

Applications for home purchases, viewed as a gauge of future homebuying activity, dropped 3 percent last week. Purchase applications still remain 2 percent higher than a year ago.

The average 30-year fixed-rate mortgage rose to the highest level since October 2014, averaging 4.28 percent last week, the MBA reports. Average rates for jumbo loans also inched higher.

“While jumbo 30-year fixed rates have been a bit slower to increase compared to overall fixed rate mortgage rates in recent weeks, they increased 7 basis points last week to an average of 4.29 percent,” says Lynn Fisher, the MBA’s vice president of research and economics. “At the same time, the average five-year ARM rate declined by 11 basis points to 3.28 percent, which may provide an alternative outlet for jumbo borrowers.”

Source: “Mortgage Applications Fall 4 Percent as Refinancings Hit Postelection Rates,” CNBC (Dec. 14, 2016)


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