Rates Jump, Mortgage Applications Fall

By:
Kara Johnson | November 17, 2010

Mortgage applications plunged last week, after interest rates on fixed-rate loans jumped about two-tenths of a percentage point, according to figures released today by the Mortgage Bankers Association.

Applications to refinance a mortgage fell a seasonally adjusted 16.5 percent, to their lowest level since July. Purchase applications fell 5.0 percent, their first decline in three weeks. Total application volume was down 15.0 percent.
 
The figures were not adjusted for the Veterans Day holiday, although market factors were the dominant force behind the changes, according to Michael Fratantoni, MBA vice-president of research and economics.
 
"Rates increased sharply last week due to stronger economic data and lingering uncertainty regarding the structure and impact of the Fed's QE2 program,”  Fratantoni said. “Mortgage applications, particularly for refinances, dropped in response." 
 
Average interest rates on 30-year fixed-rate mortgages jumped to 4.46 percent, up from 4.28 percent previously, while 15-year mortgages posted an even bigger increase, rising to 3.87 percent from 3.64 percent the week before. Both are the highest either rate has been since mid-September.
 
Despite last week’s drop, purchase applications are still up an average of 1.3 percent over the past four weeks, while refinance applications have declined an average of 3.7 percent a week.
 
The survey covers the week ending last Friday, Nov. 12.

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