Smart Borrower Blog

Mortgage Applications Jump As Borrowers Anticipate Higher Rates


Jan 17th, 2018 @ 8:57 PM by Amber Nelson


U.S. mortgage borrowers came out in force in the latest week, according to a new report from the Mortgage Bankers Association , a likely indication that consumers see the writing on the wall when it comes to historically low interest rates.

The MBA’s Market Composite Index, a measure of total home loan application volume, jumped up 4.1 percent on a seasonally adjusted basis during the week ended January 12, 2018. That increase was led by a 4 percent increase in refinance loan requests. Refinance applications made up 52.2 percent of all mortgage activity during the past week, down slightly from 52.9 percent the week before.

Application volume for home purchase mortgages grew by 3 percent and is 7 percent higher than one year ago.

Adjustable rate mortgages (ARMS) remain unpopular, accounting for only 5.2 percent of all applications.

Government-backed mortgage saw a little movement in the last week, with the FHA loan share of applications rising to 11.7 percent, up from 11.1 percent the previous week. USDA mortgage loans inched up to 0.8 percent from 0.7 percent of all applications. VA home loans, on the other hand, made up a 10.7 percent share of all mortgage requests, a decline from 11.4 the week before.

The rise in mortgage application volume can probably be attributed to the steady increase in mortgage interest rates. During the past week, the average rate on a 30-year fixed rate mortgage (FRM) jumped to its highest level in almost a year, rising to 4.33 percent with an average of 0.54 points, up from 4.23 percent the week prior.

ARM rates also hit a recent high, with the average interest rate on a 5/1 ARM climbing to the highest level since April 2011. It is now at 3.62 percent with an average of 0.48 points, up from 3.50 percent the previous week.

As rates continue to rise in sync with an improving economy, refinancing will be less attractive to homeowners and overall mortgage application volume may slide for a time.

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.

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