Applications for home-purchase loans dropped significantly last week as long-term interest rates climbed higher, the Mortgage Bankers Association reported today.
The market composite index, a measure of total mortgage application volume, was down 2.8 percent on a seasonally adjusted basis from mid-month, according to MBA. Leading the decline was a 7.3 percent drop in the index that tracks purchase loans, despite a 3.3 percent increase in the refinance index.
Interest rates on long-term loans increased for the second straight week, MBA reported, with the average contract interest rate on 30-year fixed-rate mortgages last week rising to 6.38 percent from 6.29 percent the week before and the 15-year fixed rate jumping to 6.06 percent from 5.99 percent.
The rate on one-year adjustable-rate mortgages (ARMs), however, tumbled to 6.09 percent from 6.39 percent during the period.
Points, which are loan-processing fees expressed as a percent of the total loan amount, averaged 1.15 on the 30-year loans, 1.12 on the 15-year, and 0.93 on one-year ARMs. These points include the origination fee and are based on loan-to-value ratios of 80 percent.
According to MBA, the uptick in refinancing activity boosted that segment’s market share to 46.4 percent of total applications, up from 43.5 percent at mid-month. Despite the strong decline in the one-year ARM rate, the adjustable-rate share of applications dipped to 12.2 percent from 12.6 percent.
The Mortgage Bankers Association survey covers approximately 50 percent of all U.S. retail residential mortgage originations, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts.