Mortgage rates ticked up ahead of a more significant drop in mortgage applications the succeeding week, according to information reported by Freddie Mac and the Mortgage Bankers Association (MBA), respectively. Reports by both organizations seem to underscore a trend in rising rates for certain fixed-rate mortgages as overall applications fall.
Freddie Mac’s latest report notes a 0.02 percent uptick in both 30-year and 15-year fixed mortgage rates analyzed the week ending July 26, and another 2 basis point increase for 15-year fixed mortgages the week prior while 30-year fixed rates declined by 1 basis point.
“The next few months will be key for gauging the health of the housing market,” Freddie Mac Chief Economist Sam Khater said in a press release. “Existing sales appear to have peaked, sales of newly built homes are slowing and unsold inventory is rising for the first time in three years.
“Meanwhile, affordability pressures are increasingly a concern in many markets, as the combination of continuous price gains and higher mortgage rates appear to be giving more prospective buyers a pause,” he added. “This is why new and existing-home sales are not breaking out this summer despite the healthy economy and labor market.”
Similarly, MBA reported a 2 basis point rate increase in 15-year fixed mortgages as 30-year fixed mortgage rates remained unchanged in its Weekly Mortgage Applications Survey analyzing the week ending July 20. That same survey noted a 20 basis point drop in applications during that timeframe. The previous week, MBA reported a 4 basis point uptick in rates for 15-year fixed mortgages accompanying a 2.5 percent drop in applications while rates for 30-year fixed mortgages remained stagnant.
Thirty-year fixed-rate mortgages also remained stable in MBA’s most recent survey, which reported an average contract interest rate of 4.77 percent for those with conforming loan balances ($453,100 or less), with points decreasing to 0.45 from 0.46 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate also remained unchanged from the week prior.
Meanwhile, the average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100) increased to 4.72 percent from 4.66 percent, with points increasing to 0.31 from 0.30 (including the origination fee) for 80 percent LTV loans. The effective rate increased from the previous week.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA remained unchanged at 4.78 percent, with points increasing to 0.73 from 0.69 (including the origination fee) for 80 percent LTV loans as the effective rate also increased.
The average contract interest rate for 15-year fixed-rate mortgages increased to 4.23 percent from 4.22 percent, with points increasing to 0.44 from 0.42 (including the origination fee) for 80 percent LTV loans. The effective rate increased as well.
The MBA survey features various indexes used to analyze individual mortgage types, including the Market Composite Index, a measure of mortgage loan application volume. The composite index decreased 0.2 percent on a seasonally adjusted basis for the week ending July 13 to the following week, according to MBA’s latest findings. On an unadjusted basis, the index remained unchanged from the previous week. The Refinance Index increased 1 percent from the previous week. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 2 percent higher than the same week a year prior.
The refinance share of mortgage activity increased to 36.8 percent of total applications from 36.5 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.3 percent of total applications.
The FHA share of total applications decreased to 9.9 percent from 10.6 percent the week prior. The VA share of total applications remained unchanged from 10.2 percent the week prior. The USDA share of total applications increased to 0.8 percent from 0.7 percent the week prior.
The average contract interest rate for 5/1 ARMs decreased to 4.09 percent from 4.12 percent, with points decreasing to 0.29 from 0.39 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from the previous week.