St Casimirs Mortgage Minute

Mortgage Applications Drop 4.1 Percent Over Fed Rate Uncertainty

The Mortgage Bankers Association (MBA) reported on June 1 that mortgage applications decreased 4.1 percent from the previous week despite strong buyer demand in the housing market. However, application volume is 42 percent higher than the same week a year ago. On a seasonally adjusted basis, refinance applications fell 4 percent from the previous week, and purchase applications tumbled 5 percent. Meanwhile, applications for low down payment government loans declined 6 percent to their lowest level since November. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances held steady at 3.85 percent. "Market expectations for a June Fed [rate] hike have increased recently, leading to a flattening of the yield curve, as short-term rates have risen more than longer-term rates. As a result, we saw an increase in rates for 15-year mortgages last week, even as rates on 30-year loans remained unchanged," said MBA chief economist Mike Fratantoni. "We have also seen the [adjustable-rate mortgage] share drop, as more borrowers opt for fixed-rate loans." Rising rates have pushed some jumbo loan borrowers out of the market, with the average loan size on refinances falling for three consecutive weeks.

From "Mortgage Applications Drop 4.1 Percent Over Fed Rate Uncertainty"
CNBC (06/01/16) Olick, Diana