Demand for mortgages was off slightly last week, as a drop in rates was offset by an increase in fees, the Mortgage Bankers Association said in reporting the results of its Weekly Mortgage Applications Survey.
For the week ending March 12, demand for purchase loans declined a seasonally adjusted 2.3 percent from the week before, and was down 13.9 percent from a year ago, the MBA said.
Demand for refinancings was down 1.7 percent from the week before, with requests for refinancings accounting for 67.3 percent of applications.
The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.91 percent from 5.01 percent for 80 percent loan-to-value (LTV) ratio loans — the lowest since December 2009. But the effective rate was unchanged due to a significant increase in points, to 1.3 from 0.82 (including the origination fee).
The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.24 percent from 4.32 percent for 80 percent LTV loans, a record low in the survey. However, an increase in points, to 1.47 from 0.88 (including the origination fee), increased in the effective rate from last week.
The average contract interest rate for one-year ARMs decreased to 6.75 percent from 6.8 percent, with points remaining unchanged at 0.3 (including the origination fee) for 80 percent LTV loans.
With the Federal Reserve scheduled to wrap up $1.25 trillion in purchases of mortgage-backed securities this month, mortgage rates are expected to gradually rise in coming months (see story).
In a forecast published Monday, MBA economists said they expect rates on 30-year fixed-rate mortgages to rise to an average of 5.4 percent during April, May and June, hit 5.8 percent in the final three months of the year, and average 6.2 percent in 2011 and 6.4 percent in 2012.
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