Home Purchase Applications Rise

By:
Kara Johnson | April 06, 2011

Mortgage rates held fairly steady last week, while applications for home purchases jumped in advance of a fee increase on Fannie Mae-backed loans.

Average interest rates on 30-year fixed-rate mortgages edged up to 4.93 percent last week, up a single point from 4.92 percent the week before. Meanwhile, average rates on 15-year fixed rate loans declined, falling to 4.14 percent from 4.16 percent the week before, according to figures released today by the Mortgage Bankers Association.
 
Mortgage applications for home purchases hit their highest level of the year, rising a seasonally adjusted 6.7 percent over the previous week. Borrowers may have been motivated by a pending increase in loan level pricing adjustments on Fannie Mae loans that was due to take effect on Friday, April 1. The changes effectively increased interest rates by a quarter to half a percentage point on most Fannie Mae mortgages.
 
Freddie Mac previously made a similar adjustment that took effect March 1.
 
Despite the increase, purchase applications continue to remain low by historical standards. Purchase applications were 16.8 percent below their level of one year earlier and remained at levels last seen in 1997, according to Michael Fratantoni, MBA vice president of research.
 
Applications to refinance an existing mortgage fell a seasonally adjusted 6.2 percent, which Fratantoni attributed to a shrinking pool of borrowers eligible for and interested in refinancing. Refinance applications made up 61.2 percent of all mortgage applications, their lowest share in nearly a year.
 

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