Refinance Volume Falls to 18-Year Low
Sep 12th, 2018 @ 9:06 PM by Amber Nelson
Fewer Americans applied for refinance loans in the latest week, as U.S. mortgage interest rates rose to a 5-week high, according to the Mortgage Bankers Association. In fact, that jump in rates was enough to push refinance application volume to its lowest point in 18 years.
“As mortgage rates increased to a five-week high, the refinance index decreased to its lowest level since the end of 2000,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “Treasury rates increased through the week, mainly in response to stronger data on the manufacturing sector, unemployment claims and signs of faster wage growth.”
The MBA’s refinance index fell 6% in the past week and 39% from the year before. Mortgage rates were noticeably lower one year ago and most borrowers who could refinance have already done so. Refinance requests made up just 37.8% of total mortgage applications, down from 38.9% last week.
Long-term mortgage interest rates rose to an average of 4.84% with 0.46 point for a 30-year fixed rate loan, up from 4.80% with 0.43 point the previous week. That is the highest rate since the week of August 9, 2018.
The number of applications for home purchase mortgages rose though, with the MBA purchase index inching up 1% in the latest week and up 4% for the year. Constantly rising home prices and limited inventory have dampened the pace of home sales over the past year. Tighter mortgage underwriting standards have also held back some buyers from entering the market.
Adjustable rate mortgages (ARMs) were more popular this week, with AMR loan requests making up 6.4% of total applications. And government loans got some extra attention as FHA loans applications made up 10.4% of the total, up from 10.2% the week before and the VA loan share of requests rose to 10.5%, up from 10.0%.
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.