Mortgage applications plummet as interest rates rise
A stall in refinancing activity and higher interest rates caused mortgage application filings to plummet 11.5% for the week ending May 31.
The Mortgage Bankers Association noted its refinance index fell 15% from the previous week while the seasonally adjusted purchase index declined 2%.
Overall, refinancing activity declined with it making up only 68% of all applications, down from 71% a week earlier.
Still, the share of refi apps tied to the Home Affordable Refinance Program remained unchanged at 32%.
Rising interest rates may have been the cause of fewer application filings, analysts suggest.
"Mortgage applications fell last week as a result of homeowners being shocked by the bump in interest rates," said Bob Walters, chief economist with Quicken Loans. "I don’t foresee that this downward trend in applications will continue as homeowners get off the sidelines and take advantage of rates that are still relatively near record lows."
The average contract interest rate for a 30-year, fixed-rate mortgage with a conforming loan balance increased to 4.07% from 3.9% a week earlier.
Meanwhile, the 30-year, FRM jumbo increased to 4.2%, up from 4.07% a week earlier.
In addition, the average 30-year, FRM backed by the FHA edged up to 3.76%, compared to 3.62% a week earlier.
The 15-year, FRM rose to 3.23% from 3.1% as the 5/1 ARM rate came in at 2.76%, up from 2.6% a week ago.