Applications for purchase loans increased last week, even as interest rates skyrocketed to their highest level in nearly two years on news that the Fed may begin to wind down its stimulus program this year, the Mortgage Bankers Association (MBA) reported today.
Despite market volatility, “applications for conventional purchase loans picked up by more than 3 percent over the week, and total purchase applications were 16 percent higher than one year ago, indicating that homebuyers are not yet dissuaded by the increase in mortgage rates,” said Mike Fratantoni, vice president of research and economics at the MBA, in a statement.
“Government purchase applications dropped again, likely a function of the recent increase in FHA mortgage insurance premiums,” he added.
The increase came as the average interest rate for a 30-year-fixed-rate mortgage with a loan balance of $417,500 or less spiked to 4.46 percent from 4.17 percent a week earlier, according to the MBA’s latest Weekly Mortgage Applications Survey.
That was the highest rate recorded since August 2011, the MBA said.
“Interest rates moved up sharply following the Federal Reserve press conference last Wednesday where it was indicated that the Fed could begin tapering their asset purchases later this year,” Fratantoni said. “Mortgage rates increased by the most in a single week since 2011, and refinance application volume dropped to its lowest level in almost two years.” Source: MBA