Rising interest rates rein in mortgage refinancing activity
As mortgage rates edge back up from record lows, the surge in home refinancings is beginning to wane.
But with the typical 30-year fixed rate remaining in the mid-4% range, the cost of a loan can still look pretty good to lucky home buyers who can qualify in today's tight lending environment.
The Mortgage Bankers Assn. reports that, after adjusting for the Thanksgiving holiday, its index that measures mortgage loan application volume dropped 16.5% during the week that ended Friday.
Mortgage refinancings were down 21.6%, their third straight week of decline in volume, to their lowest level since June, the MBA said in a news release Wednesday morning.
An index of applications for loans to purchase homes, by contrast, went up by an adjusted 1.1% -- hardly a signal of a housing boom but more encouraging for market watchers than the declines in purchase activity after federal tax credits for home buyers expired last spring.
The MBA said 25.1% of the applications were for home purchases, up from 21.4% in the prior week. Applications for home purchases are at their highest level since May, the trade group said.
The average interest rate on mortgage contracts rose to 4.56% from 4.50%, with average upfront points (including lender origination fees) increasing to 0.96% of the loan amount from 0.87%, the MBA said. That was for mortgages with 20% down payments or, in the case of refinancings, equivalent home equity.
Freddie Mac's separate weekly report on mortgage interest trends, which measures what lenders are offering rather than actual contract rates, was on the rise late last month. It bottomed out in a Nov. 11 report at 4.17% and had risen to 4.40% last Thursday. It's due out again Thursday.
-- E. Scott Reckard