Housing
Mortgage Loan Rates Move Higher, Applications Drop
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The Mortgage Bankers Association (MBA) released its weekly report on mortgage applications Wednesday morning, noting a decrease of 1.5% in the group’s seasonally adjusted composite index for the week ending June 8. Mortgage loan rates rose last week on all five types of loans the MBA tracks.
Later Wednesday afternoon the Fed’s FOMC is expected to raise the bank’s policy rate by a quarter point and tomorrow the European Central Bank is expected to leave its policy rate unchanged. What matters to analysts and economists are the tea leaves, what the central bankers have to say about the present and what they are hinting about the future.
Rates have been moving up steadily if not in big jumps. According to Mortgage News Daily’s Matthew Graham, the increases are “due to headwinds that cannot be quickly defeated. Â These include the Fed’s increasingly restrictive monetary policy outlook, the increased amount of Treasury issuance to pay for the tax bill (higher bond issuance = higher rates), and the possibility that fiscal stimulus results in higher growth/inflation.” Tuesday’s 30-year fixed rate was 4.70%, up 0.02 percentage points from Friday’s best rate.
On an unadjusted basis, the MBA’s composite index increased by 9% week over week. The seasonally adjusted purchase index fell by 2% compared with the week ended June 1. The unadjusted purchase index increased by 9% for the week, and is now 0.2% lower 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 remained unchanged at 35.6%.
Adjustable rate mortgage loans accounted for 6.8% of all applications, down from 7.1% in the prior week.
According to the MBA, last week’s average mortgage loan rate for a conforming 30-year fixed-rate mortgage increased from 4.75% to 4.83%. The rate for a jumbo 30-year fixed-rate mortgage rose from 4.70% to 4.74%. The average interest rate for a 15-year fixed-rate mortgage rose from 4.21% to 4.23%.
The contract interest rate for a 5/1 adjustable rate mortgage loan increased from 4.08% to 4.11%. Rates on a 30-year FHA-backed fixed rate loan rose from 4.77% to 4.83%.
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