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Mortgage interest rates rise, application volume dips

Mortgage interest rates are increasing, and overall application volume is dipping, but while refinance applications decline, new purchase applications are actually improving.

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Mortgage application volume falls as interest rates rise

According to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 21, 2013, mortgage application volume fell 3.0 percent for the week. Refinance applications fell 5.0 percent, marking their lowest level since November 2011, now accounting for 67 percent of all applications after hovering around 80 percent for most of 2012. Meanwhile, purchase applications actually rose 2.0 percent for the month and 16.0 percent for the year.

“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,” said Mike Fratantoni, MBA’s Vice President of Research and Economics. “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.”

Fratantoni added, “However, 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. Government purchase applications dropped again, likely a function of the recent increase in FHA mortgage insurance premiums.”

Average contract interest rates

According to the MBA:

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  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) increased to 4.46 percent, the highest rate since August 2011, from 4.17 percent, with points decreasing to 0.35 from 0.41 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.
  • The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) increased to 4.52 percent, the highest rate since March 2012, from 4.23 percent, with points decreasing to 0.28 from 0.34 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
  • The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 4.20 percent, the highest rate since August 2011, from 3.85 percent, with points increasing to 0.40 from 0.22 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
  • The average contract interest rate for 15-year fixed-rate mortgages increased to 3.55 percent, the highest rate since November 2011, from 3.30 percent, with points increasing to 0.43 from 0.39 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
  • The average contract interest rate for 5/1 ARMs increased to 3.06 percent, the highest rate since October 2011, from 2.81 percent, with points increasing to 0.39 from 0.35 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

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