Pushed by higher interest rates over the last month, mortgage applications saw a rise from a week ago as home purchases and refinancing shot upward. Refinances led the increase in volume by 17.8%, while purchase money applications rose a seasonally adjusted 5.1%, according to the Mortgage Bankers Association.
The combined market composite index for mortgages rose a seasonally adjusted 13.2% as homeowners and home buyers moved more rapidly to apply for mortgages with rising interest rates over most of the past month.
However, mortgage rates on fully executed 30-year fixed rate loans dropped to 5% from 5.12% for the week with 0.97 points on an 80% loan-to-value mortgage. “Ongoing turmoil in the Middle East brought interest rates lower last week,” said Michael Fratantoni, MBA’s chief economist. “Borrowers took advantage of these lower rates, bringing application activity back near levels from two weeks ago, following sharp declines last week.”
The four week moving average also rose 1.9% as refinances made up the largest share of mortgage applications at 65.7%, a slight 1.7% rise from the previous week. Conventional fixed-rate mortgages composed the majority of home loans with just 5.6% of applications being made for adjustable rate mortgages.
The drop in mortgage rates was reported last week by Freddie Mac to 5% and confirmed by the bankers’ survey, driving an increase in residential home sales at least for the week. The housing market remains rocky in most areas of the U.S. as home values decline in the majority of markets, but shows improving trends in the Mid-West and most Northern states.
The average rate on a closed 15-year fixed rate mortgage also showed a decline for the week to 4.28% from 4.34% with 0.80 points.