Rapidly rising rates lead to mortgage refinance application slump

Mortgage rates posted some of their biggest increases of the year last week and, in turn, depressed the market for mortgage refinance applications, according to data for the week ending Aug. 17 released today by the Mortgage Bankers Association. Total mortgage applications plummeted 7.4 percent thanks to a 9 percent decrease in applications for refinances, which comprised 80 percent of the market, down a single percentage point from a week earlier. Applications for loans for home purchases ticked up 0.9 percent.

It’s the third consecutive week of application declines.

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Interest rates for 30-year fixed-rate mortgages with conforming balances increased one-tenth of a percentage point to 3.86 percent from 3.76 percent. Jumbo loans with similar terms jumped to 4.11 percent from 4.03 percent, while Federal Housing Administration-backed 30-year fixed-rate loans saw their rate rise 9 basis points to 3.62 percent. Finally, 15-year fixed-rate loans rose to 3.15 percent from 3.12 percent.

The MBA also noted that investors accounted for 5.7 percent of all home purchase mortgage applications in July, up from 5.5 percent in June. Second home purchasers took out 5.8 percent of loans, up two-tenths of a percentage point month-over-month. — Adam Fusfeld