Mortgage applications decreased for the third straight week as rates hit their highest level in more than two years.
The Mortgage Composite Index for the week ending Aug. 23 fell 2.5% on a seasonally adjusted basis from the previous week, according to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey. On an unadjusted basis, the Index fell 3% from the week prior. The Index tracks loan application volume.
Refi activity was also down, with the Refinance Index falling 5% from the previous week. The Refinance Index has fallen 64.2% since May. The total refinance share of mortgage activity fell from 61% the previous week to 60%, the lowest share since April of 2011.
Interest rates, meanwhile, are up. Rates have been climbing since late May on speculation that the Federal Reserve would start tapering the bond purchase program it started last year to light a fire under the sluggish economy.
The average interest rate for 30-year fixed rate mortgages with loan balances greater than $417,000 rose from 4.74% to 4.78%. The average rate for 30-year FRMs with conforming loan balances ($417,000 or less) rose from 4.68% to 4.8%, the highest rate since April of 2011.
The average rate for FHA-backed mortgages also rose, spiking to 4.52% -- the highest rate since July 2011 – from 4.4% the previous week. The average rate for 15-year FRMs and 5/1 adjustable-rate mortgages also hit their highest levels since 2011, with the 15-year FRM rising to 3.84% and the 5/1 ARM hitting 3.5%.