Uncertainty Prompts Latest Slip in Mortgages
Mortgage applications may have dipped last week on speculation that the Federal Reserve could raise interest rates soon, CNBC reports.
Total mortgage applications for home purchases and refinances dropped 4.1 percent from the previous week on a seasonally adjusted basis, according to the Mortgage Bankers Association. Applications for home purchases fell 5 percent week-to-week, while refinance applications fell 4 percent.
Still, total mortgage applications are 42 percent higher than the same week one year ago, MBA reports. The average 30-year fixed-rate mortgage was 3.85 percent last week.
"Market expectations for a June Fed [rate] hike have increased recently, leading to a flattening of the yield curve, as short-term rates have risen more than longer-term rates," says Mike Fratantoni, MBA's chief economist. "As a result, we saw an increase in rates for 15-year mortgages last week, even as rates on 30-year loans remained unchanged. We have also seen the ARM [adjustable rate mortgage] share drop, as more borrowers opt for fixed-rate loans."
Source: “Mortgage Applications Drop 4.1% Over Fed Rate Uncertainty,” CNBC (June 1, 2016)
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