Mortgage volumes are growing, despite the rise in rates

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Borrowers appeared to have shrugged off interest rate surges last week, causing mortgage volumes to rise by second week in a row, according to the Mortgage Bankers Association.

The Market Composite Index, which tracks mortgage application activity based on weekly MBA research, showed a seasonally adjusted 2.1% weekly gain for the period ending June 18, reflecting both refinancing and purchases growth. Unadjusted, the index rose 1% from the previous week. Compared to the same week of 2020, when there was increased economic activity due to the lifting of restrictions related to the pandemic, the total volume of mortgage loans was 11.2% lower on a seasonally adjusted basis.

The refinancing index also increased in its second week, climbing 3%, driven by a sharp increase in traditional refinancing applications, according to Joel Kahn, MBA’s deputy vice president of economic and industry forecasting. Compared to last year, the volume of refinancing was 9% lower.

The shopping index was up 1% on a seasonally adjusted basis from a week earlier, while unadjusted volume was down 1%. The unadjusted buying index was 14% below the level of the same week last year.

“Public procurement bids were the main reason for the increase in the past week, which also contributed to a slightly smaller overall average purchase loan size,” said Kahn.

The average dollar amount of purchases fell to $ 398,700 from $ 400,000 in the previous week, or 0.3%. It was the first week since early April that average purchases fell below 400k. Housing prices fell record highs This year, purchases have become unavailable for many potential buyers, and the size of mortgage loans has increased accordingly.

But the decrease in purchases was offset by an increase in the average refinancing amount, which jumped 2% to $ 305,200 from $ 299,200 a week earlier. The total average size of all mortgages also increased from the previous week, rising to $ 340,200 from $ 337,800.

Refinancing takes a big chunk of the pie
Due to the increased refinancing activity, its share in the total volume of mortgage loans increased for the second week in a row, amounting to 62.5% compared to 61.7% a week earlier.

The share of applications for adjustable rate mortgages also rose to 3.9% from 3.8% in the previous week.

But in general, the share of mortgage applications supported by government programs did not increase. FHA-secured mortgages accounted for 9.5% of the total, up from 9.6% in the previous week, while loans taken through programs sponsored by Veterans Affairs fell to 11.2% from 11. 5% share. The share of mortgage loans issued by the USDA did not change every week at 0.5%.

30-year fixed rates rise from six to seven basis points across the board

  • The average interest rate on 30-year fixed rate mortgages with a corresponding loan balance of $ 548,250 rose to 3.18%, the highest level in a month, up from 3.11% a week earlier.
  • The average contractual interest rate on 30-year large fixed-rate loans (with balances above $ 548,250) also rose six basis points to 3.26% from 3.20% in the previous week.
  • The average contractual interest rate on 30-year fixed rate mortgages secured by the Federal Housing Authority increased to 3.21%. A week earlier, the average was 3.14%.
  • The average interest rate on 15-year fixed rate mortgages rose to 2.58% from 2.49% in the previous week.
  • The 5/1 adjustable rate mortgage was the only large average mortgage that did not register an increase and remained unchanged at 2.69% for the week.



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