Mortgage application volume posted a sharp drop last week as long-term interest rates gained considerably, the Mortgage Bankers Association reported today.

The group’s market composite index, a measure of home loan application volume, fell 22.6 percent last week on a seasonally adjusted basis from the first week of the month. Leading the decline was a 27.9 percent drop in the index that tracks refinance applications, followed by an 11.5 percent decrease in the purchase-loan index.

Borrowing costs rose across most loan types last week, MBA reported. The average interest rate on 30-year fixed-rate mortgages jumped 37 basis points during the latest survey period, rising from 5.72 percent to 6.09 percent. Also up 37 basis points was the average rate on 15-year fixed mortgages, climbing from 5.18 percent to 5.55 percent.

Average rates on one-year adjustable mortgages (ARMs), however, held steady at 5.72 percent.

Points, or loan-processing fees expressed as a percent of the total loan amount, averaged 1.1 on the 30-year loans, 1.08 on the 15-year, and 0.91 on one-year ARMs. These points include the origination fee and are based on loan-to-value ratios of 80 percent.

According to MBA, the refinance share of mortgage activity decreased to 61.7 percent of total applications from 67.4 percent the previous week, while the ARM share increased from 9.9 percent to 12.8 percent.

The Mortgage Bankers Association survey covers approximately 50 percent of all U.S. retail residential mortgage originations, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts.

Source: Inman News