Home Loan Demand Falls With Rate Rise

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According to the Mortgage Bankers Association’s Weekly Applications Survey, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased slightly last week. It was the first increase in four weeks. Rates on jumbo loans, loans backed by the Federal Housing Administration, and 15-year fixed-rate mortgages all fell. The slight uptick in rates on conforming loans led to a slowing of refinance activity, which brought the Market Composite Index – a measure of both refinance and purchase application demand – down 7.2 percent. Mike Fratantoni, MBA’s chief economist, said, though the weekly increase in rates was small, they were trending up in the week following Labor Day. Still, much of the drop in demand was due to the 11 percent decrease in refinance activity. Demand for applications for loans to buy homes, though down, only fell 3 percent from the previous week. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

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