Loan applications decline as mortgage interest rates skyrocket
Mortgage applications fell 3% last week as mortgage rates rose on fears of less Fed intervention in the mortgage-bond market.
The average contract interest rate for a 30-year, fixed-rate mortgage with a conforming loan balance shot up to 4.46% from 4.17% a week earlier: the highest it's been since August 2011, the Mortgage Bankers Association reported.
For the same week ending June 21, refinance applications dipped 5% even as purchase applications edged up by 2%.
The shift in the nation's refi activity accompanied a sharp rise in mortgage rates.
"Interest rates moved up sharply following the Federal Reserve press conference last Wednesday where it was indicated that the Fed could begin tapering their asset purchases later this year," said Mike Fratantoni, MBA’s vice president of research and economics.
Since then, rates have shifted in an upwardly direction.
On the other hand, refinancing activity continued to fall, with refis representing only 67% of all mortgage applications.
Applications overall moved inverse to rates in this week's report, with mortgage rates rising across the board.
Hitting its highest level since March 2012, the 30-year, FRM jumbo increased to 4.52% from 4.23% a week earlier.
Additionally, the average 30-year, FRM backed by the FHA climbed to 4.20% from 3.85%.
The 15-year, FRM also rose to 3.55% from 3.30%, while the 5/1 ARM grew to 3.06%, it's highest level since October of 2011.