Mortgage Applications Edge Higher As Purchase Demand Offsets Refi Decline
By CU Today Staff —
WASHINGTON—Mortgage applications increased 0.8% from the previous week as a modest rise in purchase activity offset a decline in refinancing, according to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending Aug. 28.
The seasonally adjusted Market Composite Index increased 0.8%, while the unadjusted index declined 1%. The seasonally adjusted Purchase Index rose 2%, although the unadjusted index fell 0.3% and remained 0.2% below its year-earlier level. The Refinance Index decreased 1% for the week and was 19% lower than a year earlier.
"Mortgage rates reached their highest levels in four weeks as investors’ concerns about inflation and growing deficits push yields higher across the globe,” said Mike Fratantoni, MBA’s SVP and chief economist. “Refinance volume dropped in response, but purchase volume increased modestly over the week and was slightly below last year's level. In many local markets, potential buyers have plenty of homes to choose, and this is likely supporting transaction volume. Another trend we’re monitoring is more borrowers choosing ARMs, with the ARM share back to 8% last week, its highest level in five weeks.”
The refinance share of applications declined to 41.8% from 42%, while the adjustable-rate mortgage share increased to 8%. FHA applications accounted for 15.9% of activity, down from 16.2%; the VA share rose to 13.6% from 12.8%; and the USDA share remained unchanged at 0.5%.
The average contract rate for conforming 30-year fixed mortgages increased to 6.79% from 6.78%, while the jumbo rate rose to 6.76% from 6.73% and the FHA rate increased to 6.49% from 6.46%. The 15-year fixed rate climbed to 6.14% from 6.10%, while the average rate for 5/1 ARMs declined to 5.94% from 5.98%.
Originally reported by CU Today.