With the rise of mortgage rates comes a higher volume of mortgage applications, latest weekly surveys made separately by Freddie Mac and the Mortgage Bankers Association confirmed. On the mortgage rate side, the 30-year fixed mortgage rate increased for the first time this 2017. Meanwhile, mortgage applications are at their highest level since June.
Freddie Mac’s Weekly Mortgage Rates Survey
For the week ended January 26, 2017, the 30-year fixed mortgage rate recorded 4.19%, up from its 4.09% average of the previous week. About the same time last year, the 30-year FRM averaged 3.79%.
Meanwhile its shorter-term counterpart, the 15-year fixed-rate mortgage averaged 3.40% during the week surveyed. It showed an increase from the previous week’s 3.34% and from last year’s average rate of 3.07%.
The 5/1-year adjustable rate mortgage slightly dropped to 3.20% for the week ended January 26. Last week, the 5/1-year rate averaged 3.21% and a year ago it was 2.90% on an average.
Sean Becketti, who serves as chief economist at Freddie Mac, offered this explanation to the results of the current Primary Mortgage Market Survey® with the rise of the 15-year and 30-year fixed mortgage rates for the first time this year:
“The 10-year Treasury yield increased more than 10 basis points this week. The 30-year mortgage rate moved up as well to 4.19 percent, a 10 basis point jump. This week marks the first increase in the mortgage rate since December 29.”
Mr. Becketti continued, “The 2.8 percent decline in existing home sales in December is a reminder of the lack of homes for sale. According to the National Association of Realtors, supply is at its lowest level since 1999, a factor that should support higher house prices regardless of the oscillations of the mortgage rate.”
MBA’s Weekly Mortgage Applications Survey
For the week ended January 20, 2017, the volume of mortgage loan applications increased 4% on a seasonally adjusted basis compared to the previous week’s 0.8% increase. The survey results took into account the Martin Luther King holiday adjustments.
The market composite index, which measures the mortgage application volume, did decrease 5% on an unadjusted basis. The refinance index saw an increase of 0.2% compared to the previous week.
Meanwhile, the purchase index on a seasonally adjusted basis posted a six-percent increase from the previous week, marking its highest level since June 2016.
On an unadjusted basis, the purchase index increased 2% from the previous week and was up 0.1% from last year’s numbers.
Refinance’s share of the total mortgage activity dropped to 50%, the lowest it has been since July 2015 and from the previous surveyed week’s 53%. The share of adjustable-rate mortgage in the total loan applications remained at 5.7%.
For the relevant week surveyed, the mortgage loans taken out averaged $309,200, the highest since December 16.
Let’s take a look at how much the government loans took up in the total application volume during the surveyed period:
- FHA loans: 13.6% vis-a-vis 13.1%
- VA loans: 12.2% vis-a-vis 12.1%
- USDA loans: unchanged at 0.9%
About the PMMS®, Freddie Mac said it is based on conventional mortgages with an LTV of 80%, covering 125 lender respondents. MBA’s Weekly Mortgage Applications Survey covers 75% of all U.S. residential mortgages, according to the MBA site.
Justin McHood is a managing partner at Suited Connector and has been recognized by national media outlets as a financial expert for more than a decade.
