New Mortgage Loans Slide Again as Loan Rates Continue to Rise
The Mortgage Bankers Association (MBA) released its weekly report on mortgage applications Wednesday morning, noting a decrease of 3.5% in the group’s seasonally adjusted composite index for the week ending April 12. Mortgage interest rates increased on all five types of loans the MBA tracks.
On an unadjusted basis, the MBA’s composite index fell by 3% in the last week. The seasonally adjusted purchase index increased by 1% compared with the week ended April 5. The unadjusted purchase index rose by 2% for the week and was 7% higher year over year.
Mortgage loan rates for a top-tier 30-year fixed-rate loan increased from 4.21% to 4.25% last week, according to Mortgage News Daily. As of Tuesday night, top-tier borrowers were paying 4.34% for that loan. The yield on a 10-year U.S. Treasury note rose slightly last week from 2.47% to 2.50% as of last night’s close. A year ago the 10-year note yielded 2.83%.
Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting said:
Mortgage applications decreased over the week, driven by a decline in refinances. With mortgage rates up for the second week in a row, it’s no surprise that refinancings slid 8 percent and average loan sizes dropped back closer to normal levels. Purchase activity remained strong and increased slightly, reaching its highest level since April 2010. The spring buying season continues to be robust, with activity more than 7 percent higher than a year ago and up year-over-year for the ninth straight week.
The MBA’s refinance index decreased by 8% week over week, and the percentage of all new applications that were seeking refinancing dropped from 44.1% to 41.5%.
Adjustable rate mortgage loans accounted for 6.6% of all applications, down a full percentage point compared with the prior week.
According to the MBA, last week’s average mortgage loan rate for a conforming 30-year fixed-rate mortgage increased from 4.40% to 4.44%. The rate for a jumbo 30-year fixed-rate mortgage rose from 4.28% to 4.33%. The average interest rate for a 15-year fixed-rate mortgage ticked up from 3.83% to 3.84%.
The contract interest rate for a 5/1 adjustable rate mortgage loan rose from 3.78% to 3.88%. Rates on a 30-year FHA-backed fixed-rate loan rose from 4.42% to 4.43%.