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Mortgage Applications Down 3rd Week as Rates Jump

Robinson, Matt
Mortgage application activity fell for the third consecutive week as key interest rates reached their highest levels in a year, the Mortgage Bankers Association reported this morning in its Weekly Applications Survey for the week ending May 24.

The overall Market Composite Index decreased by 8.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 9 percent compared to the previous week. 

The Refinance Index decreased by 12 percent, the largest single week drop in refinance applications this year, to its lowest level since December. The refinance share of mortgage activity decreased to 71 percent of total applications from 74 percent the previous week to its lowest level since April 2012.

The seasonally adjusted Purchase Index increased by 3 percent from one week earlier. The unadjusted Purchase Index increased by 2 percent compared to the previous week and was 14 percent higher than the same week one year ago.

"Mortgage rates increased to their highest level in a year,” said MBA Vice President of Research and Economics Mike Fratantoni. “Rates rose in response to stronger economic data and an increasing chance that the [Federal Reserve] may soon begin to taper their asset purchases."

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) increased to 3.90 percent, the highest rate since May 2012, from 3.78 percent, with points unchanged at 0.39 (including the origination fee) for 80 percent loan-to-value ratio loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) increased to 4.07 percent, the highest rate since August, from 3.93 percent, with points decreasing to 0.27 from 0.36 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by FHA increased to 3.62 percent, the highest rate since August, from 3.53 percent, with points increasing to 0.27 from 0.13 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.10 percent, the highest rate since August, from 2.96 percent, with points decreasing to 0.30 from 0.32 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 adjustable-rate mortgages remained unchanged at 2.60 percent, with points increasing to 0.24 from 0.23 (including the origination fee) for 80 percent LTV loans.  The effective rate decreased from last week.

The ARM share of activity increased to 5 percent of total applications.

The survey covers more than 75 percent of all U.S. retail and consumer direct residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts.