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Higher Interest Rates Leads to Decline in Mortgage Applications

An across-the-board increase in mortgage interest rates accompanied a decline in loan applications, according to the Mortgage Bankers Association. The total volume of mortgage applications decreased by 4.1 percent last week on a seasonally adjusted basis from the previous week as the interest rates moved higher for the second week in a row.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances (up to US$ 417,000) increased to 3.85 percent from 3.83 percent, with points increasing to 0.35 from 0.32 (including the origination fee) for 80 percent loan-to-value ratio loans. Refinance applications, which are more rate sensitive, dropped five percent from the previous week, seasonally adjusted. Refinance volume is, however, nearly 12 percent higher than one year ago, as rates still hover below four percent, which is historically low. Residential Mortgage applications fell by two percent from the previous week. But are 14 percent higher than the same week one year ago.

News Characteristics

Date : Apr 27, 2016
Region : North America
Industry : Mortgage Companies
Function : Mortgage Processing
Sub-Function : Origination