Mortgage Loan Rates Rose Sharply Last Week

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The Mortgage Bankers Association (MBA) released its weekly report on mortgage applications Wednesday morning, noting an increase of 4.1% in the group’s seasonally adjusted composite index for the week ending January 12. Mortgage loan rates rose last week on all five loan types that the MBA tracks. Three loan types reached multi-month highs and two jumped to multiyear highs.

On an unadjusted basis, the composite index increased by 32% week over week. The seasonally adjusted purchase index increased by 3% compared with the week ended January 5. The unadjusted purchase index increased by 35% for the week and is now 7% lower year over year.

The MBA’s refinance index increased by 4% week over week, and the percentage of all new applications that were seeking refinancing slipped from 52.9% to 52.2%.

Adjustable rate mortgage loans accounted for 5.2% of all applications, up 0.2 percentage points from the prior week.

Mortgage rates remained quite steady for the past week according to Mortgage News Daily. After a sharp jump to an average of 4.14% last Wednesday, the rate is unchanged as of Tuesday. The 10-year U.S. Treasury rate remained unchanged as well at 2.54% over the past week.

Last Friday’s report on the rise in the Consumer Price Index pushed bonds somewhat higher, but only briefly. Overall, rates remain under “general pressure,” according to Mortgage News Daily:

There’s some hope in the outlook [for lower rates] thanks to 2 decent bounces against rate ceilings in bond markets this week, but we have yet to see that hope materialize in the form of a sustained move lower.

According to the MBA, last week’s average mortgage loan rate for a conforming 30-year fixed-rate mortgage to its highest level since last March, up from 4.23% to 4.33%. The rate for a jumbo 30-year fixed-rate mortgage increased from 4.16% to 4.25%, also a high since last March. The average interest rate for a 15-year fixed-rate mortgage rose from 3.66% to 3.77%, its highest level since January of 2014.

The contract interest rate for a 5/1 adjustable rate mortgage loan increased from 3.50% to 3.62%, the highest ARM rate since April 2011. Rates on a 30-year FHA-backed fixed-rate loan increased from 4.16% to 4.30%, the highest level since last March.