Mortgage rates posted their biggest single-week gain since 2011 last week, with the average on 30-year fixed-rate loans increasing by nearly three-tenths of a percent.
Average interest rates on 30-year fixed-rate mortgages jumped to 4.46 percent for the week, their highest since August 2011 according to the weekly survey from the Mortgage Bankers Association, up from 4.17 percent the week before. The figure includes an average of 0.35 points in fees and discounts, down from 0.41points the week before.
A similar increase was seen on 15-year fixed-rate mortgages, where the average jumped a quarter percentage point to 3.55 percent, up from 3.30 percent. It's the highest that rate has been in the MBA survey since November 2011. Average fees and discounts increased to 0.43 points, up from 0.39 points the week before.
Refinance demand weakens
The rising rates saw applications for mortgage refinancing drop a seasonally adjusted 5 percent for the week, to its lowest level since November 2011. Refinacing made up only two-thirds of all mortgage applications, their lowest share in nearly two years.
Applications for home purchase mortgages were relatively unaffected however, rising a seasonally adjusted 2 percent from the previous week and up 1 percent from the same week one year earlier.
"Interest rates moved up sharply following the Federal Reserve press conference last Wednesday where it was indicated that the Fed could begin tapering their asset purchases later this year," said Mike Fratantoni, an MBA economist. He said the annual increase in home purchase mortgage applications suggest that home buyers are not being discouraged by the rise in rates.
Fewer borrowers seek FHA loans
Applications for government-backed purchase mortgages have been declining for several weeks, however which Frantantoni attributed to a recent increase in mortgage insurance fees for FHA mortgages.
Average rates on 30-year fixed-rate FHA mortgages surged to 4.20 percent last week, up from 3.85 percent the week before, with an average of 0.40 points in fees and discounts, up from 0.22 points previously. It should be noted that rate and others in the MBA survey are based on an 80 percent loan-to-value ratio, so borrowers making the minimum 3.5 percent FHA down payment would pay a significantly higher rate.
First published on MortgageLoan.com at: https://www.mortgageloan.com/rates-take-biggest-jump-two-years-9505