Mortgage application rates in the United States declined 1.1 percent from higher interest rates last week, according to the Mortgage Bankers Association (MBA) Composite Index.
The previous week ended September 10 saw a growth of 0.3 percent in applications as against the week ended September 24.
The average contract interest rate for 30-year fixed-rate mortgages with a corresponding loan balance of $548,250 or less increased from 3.03 percent to 3.10 percent. Points, including principal fees, increased from 0.30 to 0.34 for an 80 percent loan-to-value ratio loan (loans with a downpayment of 20 percent).
Meanwhile, the average contract interest rate for 15-year fixed-rate mortgages rose from 2.34 percent to 2.43 percent. Points including origination fee have been increased from 0.24 to 0.29 for loans with a 20 percent downpayment.
Applications for home loan refinance also fell 1 per cent from the previous week and were only 0.4 per cent higher in 2020 compared to the same week.
Meanwhile, the unadjusted purchase index for mortgage applications fell 2 percent from the previous week and was down 12 percent from the same week a year ago.
Joel Kahn, MBA’s Associate Vice President of Economic and Industry Forecasting, said the rise in Treasury yields was due to rising optimism about a strengthening economy following the Federal Open Market Committee meeting last week.
“In response mortgage rates rose across all loan types, with the benchmark 30-year fixed rate reaching its highest level since early July 2021,” he said.
“The rise in rates – mostly later in the week – was accompanied by a major decline in government loan applications, with a decrease in both purchase and refinance applications. Driven by the increase in traditional refinancing, traditional loan applications increased. This was perhaps a sign that Some borrowers reacted to the higher rates and decided to refinance.
Kan said that with home prices rising more than 19 percent year over year in July, applications for larger loan amounts continue to rule out low-balance loans.
“The average loan size for purchase applications reached $410,000, the highest level since May 2021,” he said.
Survey data from the MBA — which covers more than 75 percent of all U.S. retail residential mortgage applications — came after the Federal Reserve said last week that it will likely begin reducing monthly purchases of U.S. Treasury bonds and mortgage-backed securities lower than expected. Will do, pending development labor market.
Fed Chair Jerome Powell told a news conference that the central bank said it could begin withdrawing $120 billion in monthly purchases as early as November, which is likely to raise mortgage rates.
However, the Fed noted that it would keep its interest rates near zero because “risks to the economic outlook remain.”
Reuters contributed to this report.
This News Originally From – The Epoch Times