Mortgage rates rebounded over the holidays, putting a damper on applications for refinancings, the Mortgage Bankers Association said.
Loan applications were down a seasonally adjusted 22.8 percent during the week ending Dec. 25, before registering a nearly imperceptible increase of 0.5 percent for the week ending Jan. 1, the MBA said in reporting the results of its two most recent Weekly Mortgage Applications Surveys. The results included adjustments to factor in the holiday-shortened weeks.
Requests for refinancings were down 30.5 percent the week ending Dec. 25, and applications for purchase loans were down a seasonally adjusted 4 percent. Applications for refinancings fell another 1.6 percent the week ending Jan. 1, while requests for purchase loans rose 3.6 percent.
The average contract interest rate for 30-year fixed-rate mortgages increased from 4.92 percent to 5.08 percent during the week ending Dec. 25, jumping again to 5.18 percent for the week ending Jan. 1. Average points assessed by lenders, including the origination fee, increased from 1.23 to 1.48 during the week ending Dec. 25, and decreased to 1.28 for the week ending Jan. 1.
Average contract interest rate for 15-year fixed-rate mortgages increased from 4.34 percent to 4.57 percent during the week ending Dec. 25, and to 4.62 percent for the week ending Jan. 1. Points on 15-year fixed-rate mortgages increased from 0.91 to 0.98 for the week ending Jan. 1.
Many observers expect interest rates will continue to rise as the Federal Reserve winds up $1.25 trillion in ongoing purchases of mortgage-backed securities backed by Fannie Mae, Freddie Mac and Ginnie Mae by the end of March (see story).
In a Dec. 8 forecast, the MBA projected rates on 30-year fixed-rate mortgages will rise for the next eight consecutive quarters, from an average of 4.9 percent during the final quarter of 2009 to 6.2 percent by the fourth quarter of 2011.
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