Mortgage rates kicked off February with a damper on the recent streak of drops — and activity responded in kind.
Rates reached 6.87 percent, notching a two-month high, , according to the Mortgage Bankers Association, and mortgage loan applications dropped 2.3 percent from the previous week on a seasonally adjusted basis for the period ending on Feb. 9.
Purchase-loan applications decreased 3 percent on a seasonally adjusted basis from the previous week. On an unadjusted basis, it increased 4 percent from the preceding week, though it was still 12 percent below the levels of a year ago.
The refinancing index, meanwhile, also fell 2 percent from the previous week, but was up 12 percent from last year.
The contract rate last week on the average 30-year fixed-rate mortgage with conforming loan balances ($766,550 or less) rose by seven basis points to 6.87 percent. That’s the highest mortgage rate the MBA has recorded since December — but still down significantly from the fall peak, when mortgage rates hovered close to 8 percent.
The refinancing share of total activity decreased from 35.4 percent the prior week to 34.2 percent last week. The FHA share of applications increased from 13.1 percent to 13.4 percent, while the VA share dropped from 14.1 percent to 13.1 percent and the USDA share held steady at 0.4 percent.
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The average contract interest rate for a 30-year rate with jumbo loan balances increased 12 basis points to 7 percent, while the average contract interest rate for a 15-year fixed-rate mortgage jumped from 6.41 percent to 6.53 percent.
In a statement, MBA deputy chief economist Joel Kan noted the increased mortgage rates compounded affordability challenges for homebuyers, as existing housing inventory remains stagnant.