Mortgage Loan Rates Slip Following Brexit Vote

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The Mortgage Bankers Association (MBA) released its report on mortgage applications Wednesday morning, noting a week-over-week decrease of 2.6% in the group’s seasonally adjusted composite index for the week ending June 24. Mortgage loan rates fell on three types of loans again this week.

On an unadjusted basis, the composite index decreased by 3% week over week. The seasonally adjusted purchase index also decreased by 3% compared with the week ended June 17. The unadjusted purchase index decreased by 4% for the week, and is now 13% higher year over year.

The MBA’s refinance index decreased by 2% week over week and the percentage of all new applications that were seeking refinancing rose from 57.7% to 58.1%.

Adjustable rate mortgage loans accounted for 5.9% of all applications, up from 5.7% in the previous week.

Last week’s vote in Britain to leave the European Union sent investors fleeing the equities market and turning to bonds (among other investments). When demand for bonds rises, bond yields decline, and when bond yields fall, mortgages tend to decline as well.

On Monday, Mortgage News Daily reported that 3.5% was the prevalent 30-year conventional rate being offered to top-tier borrowers, but that there were plenty of lenders offering 3.375% as well. According to the report, that was “the lowest stably-maintained rate we’ve ever recorded,” excluding some “scattered instances of 3.25% back in 2012.”

According to the MBA, last week’s average mortgage loan rate for a conforming 30-year fixed-rate mortgage decreased from 3.76% to 3.75%, its lowest level since May 2013. The rate for a jumbo 30-year fixed-rate mortgage rose from 3.70% to 3.74%. The average interest rate for a 15-year fixed-rate mortgage decreased from 3.04% to 3.02%.

The contract interest rate for a 5/1 adjustable rate mortgage loan decreased from 2.92% to 2.88%. Rates on a 30-year FHA-backed fixed rate loan remained unchanged at 3.61%, the lowest level since May of 2013.