Mortgage Applications Rise Modestly, Loan Rates Sharply Higher

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The Mortgage Bankers Association (MBA) released its weekly report on mortgage applications Wednesday morning, noting an increase of 2.9% in the group’s seasonally adjusted composite index for the week ending September 21. The index has risen for two weeks in a row, now, after three straight weeks of declines. Applications for new mortgages are moving basically sideways and interest rates on all types of loans rose last week.

Mortgage loan rates for top-tier borrowers remained steady last week at an average of 4.74% for a 30-year fixed-rate loan, according to Mortgage News Daily. As of Tuesday night, however, top-tier borrowers are looking at a rate of 4.875%, the highest rate in more than seven years. The yield on a 10-year U.S. Treasury note rose to 3.10% Tuesday, up from 3.06% on Friday. Wednesday’s expected Fed rate hike could push mortgage loan rates higher. The big question for mortgage rates is how much tightening the Fed plans going forward. More tightening will drive loan rates higher.

On an unadjusted basis, the MBA’s composite index rose by 2% week over week. The seasonally adjusted purchase index increased by 3% compared with the week ended September 14. The unadjusted purchase index rose by 2% for the week and was 4% higher year over year.

The MBA’s refinance index increased by 3% week over week, and the percentage of all new applications that were seeking refinancing increased from 39% to 39.4%.

Adjustable rate mortgage loans accounted for 6.5% of all applications, unchanged from the prior week.

According to the MBA, last week’s average mortgage loan rate for a conforming 30-year fixed-rate mortgage rose from 4.88% to 4.97%, its highest level since April 2011. The rate for a jumbo 30-year fixed-rate mortgage increased from 4.77% to 4.92%. The average interest rate for a 15-year fixed-rate mortgage rose from 4.30% to 4.38%.

The contract interest rate for a 5/1 adjustable rate mortgage loan increased from 4.17% to 4.22%, the highest level since the MBA survey began in 1990. Rates on a 30-year FHA-backed fixed-rate loan rose from 4.90% to 4.94%.