As Mortgage Rates Inch Up, Applications Fall
Diana Olick | February 11, 2015
Mortgage rates moved higher last week, which brought a quick end to a “miniboom in mortgage refinancing” that had been occurring lately, CNBC reports.
Total loan applications – which reflect applications for refinancings and home purchases – fell 9 percent on a seasonally adjusted basis for the week ending Feb. 6, the Mortgage Bankers Association reports in its weekly mortgage market survey. The portion of applications for refinancing dropped 10 percent week-to-week, while purchase applications, viewed as a gauge of future homebuying activity, dropped 7 percent. Purchase applications are now back below levels from a year ago.
"The 30-year mortgage rate increased to its highest level since early January last week, with rates moving up sharply towards the end of the week,” says Michael Fratantoni, the MBA’s chief economist. “The refinance index has fallen to its lowest level since the week ending January 9.”
But loan demand continues to trend higher compared to four weeks ago, mostly attributed to a boost in lending from the Federal Housing Administration’s recent move to lower insurance premiums, which took effect Jan. 26. FHA refinance volume continues to rise, while conventional refinancing is falling. FHA refinance applications increased 223 percent from four weeks ago and FHA purchase applications have surged 39 percent.
The 30-year fixed-rate mortgage rose to 3.84 percent last week, from 3.79 percent the week prior, the MBA reports.