Mortgage rates continued to head higher this week as mortgage activity dropped sharply, the Mortgage Bankers Association (MBA) said in its weekly mortgage report.
According to the MBA’s Weekly Mortgage Applications Survey for the week ending May 17, 2013, all mortgage types surveyed saw an increase in average interest rates, while application volume fell nearly 10 percent week-over-week.
“Mortgage rates increased to their highest level since March last week, leading to the largest single week drop in refinance applications this year,” Mike Fratantoni, MBA’s Vice President of Research and Economics, said in a statement.
Average rates for 30-year fixed mortgages increased to 3.78 percent from 3.67 percent the previous week. Those average rates refer to 30-year fixed mortgages with conforming loan balances of $417,500 or less, although other types of 30-year fixed mortgages had a similar fate.
Jumbo (loan balances greater than $417,500) 30-year fixed mortgages rose to an average rate of 3.93 percent from 3.87 percent one week earlier, while FHA-backed 30-year fixed mortgages increased from 3.43 percent to 3.53 percent week-over-week.
Shorter-term 15-year fixed mortgages saw average rates rise from 2.88 percent to 2.96 percent in one week, while 5-year adjustable-rate mortgages (ARMs) increased to an average rate of 2.60 percent after averaging 2.55 percent the previous week.
Overall, mortgage application volume decreased 9.8 percent week-over-week alongside the average rate increases. The drop was led by a large decrease in mortgage refinancing applications.
The MBA’s Refinance Index fell 12 percent on a weekly basis, and the overall share of mortgage activity associated with refinancing dropped to 74 percent of total applications. One week earlier, the refinance share stood at 76 percent.
“The refinance index has fallen almost 19 percent over the past two weeks and is back to its lowest level since late March,” Fratantoni said. “Purchase activity declined over the week but is still running about 10 percent above last year’s pace at this time.”