Homebuyers took rising mortgage rates in stride last week, but interest in refinancing continued to dwindle as rates for home loans hit their highest levels since June.
The Mortgage Bankers Association’s Weekly Mortgage Applications Survey showed purchase loan applications increased last week by a seasonally adjusted 2 percent compared to the week before, but were down 10 percent from a year ago.
Requests to refinance were down 1 percent week over week and 16 percent from a year ago, but still accounted for 63.9 percent of all mortgage applications.
Joel Kan
The increase in purchase applications “was welcome news,” said MBA forecaster Joel Kan, and was primarily driven by a 2 percent gain in conventional purchase applications. With conventional purchase loan requests averaging $439,200, the average loan size for both purchase and refinancing requests stayed elevated, at $341,400.
With interest rates on 30-year fixed-rate loans up 15 basis points over the last month, “We continue to expect weakening refinance activity as rates move higher and borrowers see less of a rate incentive,” Kan said.
The Mortgage Bankers Association reported average rates for the following types of loans during the week ending Oct. 8:
- For 30-year fixed-rate conforming mortgages (balances of $548,250 or less), rates averaged 3.18 percent, up from 3.14 percent the week before. With points increasing to 0.37 from 0.35 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans, the effective rate also increased from last week.
- Rates for 30-year fixed-rate jumbo mortgages (balances greater than $548,250) averaged 3.22 percent, up from 3.20 percent the week before. With points increasing to 0.29 from 0.27, the effective rate also increased from last week.
- For 30-year fixed-rate FHA mortgages, rates averaged 3.20 percent, up from 3.12 percent the week before. With points remaining unchanged at 0.31, the effective rate also increased from last week.
- Rates for 15-year fixed-rate mortgages averaged 2.48 percent, up from 2.45 percent the week before. With points increasing to 0.29 from 0.24, the effective rate also increased from last week.
- For 5/1 adjustable-rate mortgage (ARM) loans, rates averaged 3.08 percent, up from 2.54 percent the week before. With points increasing to 0.26 from 0.16, the effective rate also increased from last week.
Mortgage rates have been on the rise since the Federal Reserve warned last month that it could begin tapering its purchases of mortgage-backed securities and long-term Treasury bonds later this year.