Mortgage Applications Slide on Rising Interest Rates

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The Mortgage Bankers Association (MBA) released its weekly report on mortgage applications this morning, noting a decrease of 4.7% in the group's seasonally adjusted composite index following a rise of 14.8% for the previous week.

The seasonally adjusted purchase index fell by 3% from the previous report. On an unadjusted basis, the composite index slid by 4% week-over-week. The unadjusted purchase index is fell 1% for the week and is up 9% year-over-year.

The share of refinancings dropped last week to 76%, the lowest level since last May.

An MBA executive noted:

The announcement of stronger than anticipated job growth last week led to an increase in interest rates, with the 30 year fixed mortgage rate in our survey reaching the highest level in more than six months. Refinance applications declined as a result, but remain high given the steady flow of HARP applications.

The average contract interest rate for a conforming 30-year fixed-rate mortgage fell from 3.70% to 3.81%, the highest since last August. The rate for a jumbo 30-year fixed-rate mortgage decreased, from 3.80% to 3.90%. The average interest rate for a 15-year fixed-rate mortgage fell from 2.96% to 3.01%.

The contract interest rate for a 5/1 adjustable rate mortgage remained fell from 2.55% to 2.62%.

Even though mortgage rates rose last week, they remain close to record lows. Fewer homeowners were withdrawing funds from equity in the fourth quarter of 2012, so there could be some pent-up demand for equity withdrawals in the near future.

Filed under: 24/7 Wall St. Wire, Housing, Research