WASHINGTON–With mortgage rates hitting highs not seen in more than a decade, refinancings continue to plunge and volume is considerably below where it was one year ago.
Mortgage application volume declined 3.7% last week compared with the previous week, according to the Mortgage Bankers Association's seasonally adjusted index, after what some analysts called a “strange rebound” the week before.
Applications to refinance a home loan declined 11% for the week and were 84% lower than the same week one year ago. They are now at a 22-year low, the MBA data show.
Meanwhile, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 6.52% from 6.25%, with points rising to 1.15 from 0.71 (including the origination fee) for loans with a 20% down payment. That is the highest level since mid-2008, the Mortgage Bankers Association said.
"After a brief pause in July, mortgage rates have increased more than a percentage point over the past six weeks," Joel Kan, MBA's associate vice president of economic and industry forecasting, said in a statement. "Ongoing uncertainty about the impact of the Fed's reduction of its MBS and Treasury holdings is adding to the volatility in mortgage rates."
Mortgage applications to purchase a home decreased 0.4% for the week and were 29% lower than the same week one year ago.
Up in ARMs
Due to the recent jump in rates, the MBA data show share of mortgages represented by ARMs reached 10% of applications and almost 20% of dollar volume.
Overall, mortgage rates continued to surge higher this week, crossing 7% on the 30-year fixed to 7.08%, according to a separate survey by Mortgage News Daily. That is the highest rate in just under 20 years.
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