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Mortgage Applications Down as Interest Rates Rise

Data from a weekly report released by the Mortgage Bankers Association (MBA) indicates there was a 1.7 percent dip in mortgage applications nationwide for the week ending October 5, 2018. This number is adjusted for seasonal basis, whereas without adjustment the decrease is 2 percent. These numbers represent data gathered in a survey conducted by MBA accounting for over 75 percent of all U.S. retail residential mortgage applications.  

The Refinance Index shows a drop of 3 percent compared with the preceding week, while the Purchase Index dropped 1 percent over the same period. Still, compared to a year ago, the Purchase Index is actually up 2 percent.

Whereas the adjustable-rate mortgage (ARM) share of overall activity increased to account for 7.3 percent of applications, the refinance share of mortgage activity declined over the same period from 39.4 percent to 39.0. The share of applications initiated with the Federal Housing Administration (FHA) increased to 10.5 percent, up 0.3 percent from the prior week. The United States Department of Agriculture (USDA) share of all mortgage applications also went up slightly, from 0.7 percent to 0.8 percent.

Interest rates for 30-year fixed-rate mortgage contracts also went up across the board. Specifically concerning mortgages with conforming loan balances, the average contract interest rate rose from 4.96 to 5.05 percent. The average contract interest rate for 30-year fixed mortgages with jumbo loan balances reached its highest level since July 2011, hitting 4.99 percent from 4.93 percent last week. FHA-backed 30-year fixed-rate mortgages also reached a high since April 2011, 4.98 percent from 4.95 percent.   

The average contract interest rate for 15-year fixed mortgages went up over the same time period, from 4.39 percent to 4.44 percent, yet another peak since April 2010. 5/1 ARMs increased to their highest levels since the series was initiated in 2011, up from 4.24 to 4.29 percent.

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