“Mortgage rates moved 20 basis points higher last week, abruptly slowing the pace of mortgage application activity with refinance volume dropping 12% and purchase volume falling 5% for the week,” said Mike Fratantoni, MBA’s senior vice president and chief economist. “Purchase volume remains almost 13% above last year’s level, but economic uncertainty and the volatility in rates is likely to make at least some prospective buyers more hesitant to move forward with a purchase.
“One notable change last week was the full percentage point increase in the ARM share,” he added. “Given the jump in rates, more borrowers are opting for the lower initial rates that come with an ARM, with initial fixed rates closer to 6% in our survey last week.”
The MBA’s refinance index was down 12% from the previous week, although it was 68% higher than the same week a year ago. The refinance share of mortgage activity also decreased, accounting for 41.3% of total applications (compared to 43.6% the previous week).
The seasonally adjusted purchase index decreased 5% from one week earlier. The unadjusted purchase index was down 4% week over week and was 13% higher on a year-over-year basis.
By product type, the Federal Housing Administration (FHFA) share of total applications decreased from 16.3% to 15.8% during the week. The U.S. Department of Veterans Affairs (VA) share of applications dropped from 15.7% to 13.7%, while the U.S. Department of Agriculture (USDA) share was unchanged at 0.5%.
The average contract interest rate for 30-year fixed-rate mortgages increased to 6.81%, up from 6.61% a week earlier, while rates for 30-year fixed mortgages with jumbo loan balances rose by 19 basis points (bps) to 6.84%.
FHA mortgages saw rates rise 19 bps to 6.52%, while 15-year fixed rates were up 18 bps to 6.11%. The average rate for 5/1 ARMs increased from 5.93% to 6.11%.
