Mortgage Rates Rise, Applications Fall
Aug 24th, 2016 @ 8:46 AM by Amber Nelson
As mortgage rates continued to decline, applications for mortgage loans also fell during the latest week, according to data from the Mortgage Bankers Association.
The MBA’s Market Composite Index, a measure of total mortgage application volume, dropped 2.1 percent during the week ended August 19, 2016, from the week before.
Most of that decline was driven by a 3 percent decrease in application for refinance loans while requests for home purchase mortgages slipped just 0.3 percent. Refinance requests made up 62.4 percent of all applications, down slightly from 62.6 percent the previous week. With interest rates having hovered near historic lows for so many months, refinancing continues to be popular with those looking to save money on their monthly payments.
The average interest rates on a 30-year fixed rate mortgage rose to 3.67 percent, with 0.34 points in the latest week, up from 3.64 percent, with 0.31 points. With that slight uptick in rates, refinancing also becomes slightly less popular as the borrowers worry they will not realize as much interest savings.
The MBA also reported that 4.6 percent of all mortgage applications were for adjustable-rate mortgages, a very modest share compared to the days of the housing boom when ARM loans ruled the day. The interest rates so low, fixed-rate loans make sense for almost everyone now. And interest rates are predicted to stay quite low throughout the end of 2016.
Government-backed loans declined this week as well. FHA loan applications made up just 8.9 percent of all requests, down from 9.6 percent a week earlier, while VA loan requests decreased to 12.4 percent of the total from 13.2 percent.
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.