By Gretchen Wegrich
Applications for mortgage loans dropped last week after improving for three consecutive weeks; refinance demand was also low in response to rising interest rates, revealed the Mortgage Bankers Association on Wednesday.
Overall, the Market Composite Index (which measures the volume of mortgage loan applications for both refinancing and home purchases) dropped 8.1 percent in the week that ended Jan. 25, including seasonal adjustments and an accounting for the Martin Luther King holiday.
In addition, the index measuring refinancing mortgage applications also lowered 10.2 percent. After the refinance share of total mortgage activity held steady at 82 percent for several weeks, the numbers finally dropped to a 79 percent share.
The HARP loan share of refinancing applications grew from 25 to 26 percent.
The number of applications for purchase mortgages shrank by 2 percent from the previous week.
The decrease in the number of mortgage applications is linked to rising mortgage interest rates. For example, the average contract rate for a 30-year fixed-rate mortgage with a conforming balance of $417,500 or less increased by 5 basis points to 3.67 percent, the highest rate since September 2012 and the sixth time this rate has increased in seven weeks.
FHA backed 30-year mortgages had an average contract rate of 3.48 percent compared to 3.40 percent the previous week.
Additionally, Jumbo 30-year Fixed Rate Mortgage contract rate for balances above $417,500 increased to 3.95 percent.
Fifteen-year FRM rates averaged 2.95 percent, up from 2.87 percent a week earlier.
Adjustable Rate Mortgage (ARMs) applications were up to four percent of all mortgage applications, showing a slight increase from the previous week.
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