Mortgage applications fall as interest rates rise
According to data from the Mortgage Bankers Association (MBA) Weekly Mortgage Applications Survey for the week ending September 9, mortgage applications were down 1.2% from the previous week. The Composite Market Index results for the week include an adjustment for the Labor Day observance. The index was down 12% from the previous week on an unadjusted basis.
Compared to the previous week, the refinancing index decreased by 4% and is 83% lower than the same week a year ago. “The 30-year fixed mortgage rate hit the 6% mark for the first time since 2008, dropping to 6.01%, which is essentially double what it was a year ago,” said Joel Kan, Associate Vice President of MBA Economic and Industry Forecasting. .
“Rising mortgage rates caused refinance activity to drop more than 80% from a year ago and helped keep more homebuyers on the sidelines. Government lending, which tends to be favored by first-time buyers, bucked this trend and rose during the week, driven primarily by VA and USDA lending activity.
“The spread between the conforming 30-year fixed mortgage rate and ARM and jumbo loans remained wide last week, at 118 and 45 basis points, respectively. The wide spread underscores volatility in capital markets due to uncertainty about the Fed’s next policy moves.”
For 30-year fixed-rate mortgages with conforming loan balances ($647,000 or less), the average contract interest rate dropped from 5.94% to 6.01%, with points decreasing to 0 .76 versus 0.79 for a loan-to-value (LTV) ratio of 80%. ratio loans. For jumbo loans over $647,000, the average contractual interest rate for 30-year fixed rate mortgages fell from 5.46% to 5.56% and points fell to 0.39 from 0 .40 for 80% LTV loans.
For 5/1 ARMs, the average contract interest rate increased from 4.81% to 4.82%, with points decreasing to 0.52 from 0.88 for 80% LTV loans. In apps, ARM’s share of business increased to 9.1%.
Average contractual interest rates for FHA-backed 30-year fixed-rate mortgages increased from 5.61% to 5.71%, with points rising from 1.06 to 1.12 for LTV loans at 80%. Since the previous week, the FHA’s share of total claims has fallen from 13.3% to 13.4%; the share of VA went from 10.8% to 11.3%; and USDA’s share fell from 0.6% to 0.7%.
The survey covers more than 75% of all retail residential mortgage applications in the United States. Respondents include mortgage bankers, commercial banks and savings banks.