The Mortgage Bankers Association (MBA) released its weekly report on mortgage applications this morning, noting a drop of 12% in the group’s seasonally adjusted composite index compared with last week’s decrease of 4.2%. Unadjusted, the composite index fell by 2%.
The refinancing rate fell slightly to 81% of total applications, down 1% from a week ago. About 96% of the applications were seeking fixed-rate loans, consistent with last week’s reading.
The average contract interest rate for a conforming 30-year fixed-rate mortgage rose from 3.57% to 3.63%. The rate for a jumbo 30-year fixed-rate mortgage also rose, from 3.81% to 3.85%. The average interest rate for a 15-year fixed-rate mortgage increased from 2.87% to 2.96%.
The contract interest rate for a 5/1 adjustable rate mortgage rose from 2.59% to 2.72%.
The MBA said yesterday that it expects mortgage rates to rise next year and that it expects purchase applications to rise as well:
MBA expects to see purchase originations climb to $585 billion in 2013, up from a revised estimate of $503 billion for 2012. In contrast, refinances are expected to fall to $785 billion in 2013, down from a revised estimate of $1.2 trillion in 2012.
Part of the reason for the drop in refinancings next year is that so many mortgages were refinanced this year. As for mortgage rates, the MBA has this to say:
Mortgage rates are likely to stay below 4 percent through the middle of 2013, principally due to the announced ongoing purchases of mortgage-backed securities by the Federal Reserve under its QE3 program. The Fed has committed to buying $40 billion of agency MBS [mortgage-backed securities] per month until the labor market shows significant signs of improvement. Based on MBA’s originations estimate, the Fed will be buying 36 percent of all mortgages originated in 2013, and a much higher percentage of those swapped into agency MBS.
The MBA thinks the Fed could buy up as much as 50% of mortgages in the second half of 2013, which would help keep mortgage loan rates low.
Paul Ausick
Take This Retirement Quiz To Get Matched With An Advisor Now (Sponsored)
Are you ready for retirement? Planning for retirement can be overwhelming, that’s why it could be a good idea to speak to a fiduciary financial advisor about your goals today.
Start by taking this retirement quiz right here from SmartAsset that will match you with up to 3 financial advisors that serve your area and beyond in 5 minutes. Smart Asset is now matching over 50,000 people a month.
Click here now to get started.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Editors' Picks
