Slight mortgage rate hike leads to dip in refinancing applications
Mortgage rates rose slightly during the week ending July 22 and the Mortgage Bankers Association (MBA) reported a decrease of five percent in mortgage applications.
The MBA’s Weekly Mortgage Applications Survey for the week ending July 22 reported that refinancing applications decreased 5.5 percent from the previous week. The refinance share of all mortgage activity declined slightly to 69.6 percent of total applications, compared to 70.1 percent the previous week.
HSH.com reported that average interest rates on 30-year fixed-rate mortgage loans rose slightly to 4.78 percent with 0.29 points during the week ending July 22. Interest rates on 15-year mortgage loans rose to 3.99 percent with 0.27 percent.
Adjustable rate mortgages (ARMs) dipped slightly, broadening the differential between a fixed-rate home loan and an ARM. According to HSH.com, the average rate for a five-year ARM last week was 3.36 percent with 0.26 points.
Home loan limit changes
Unless Congress acts before October 1 to extend higher home loan limits, conforming loan limits for mortgage loans backed by Freddie Mac, Fannie Mae and FHA are set to be reduced. Loan limits in real estate markets with higher housing costs, currently up to $729,750 in many high cost areas, are set to be reduced to $625,500 on September 30. According to HSH.com, the lower limits may be enforced within the next few weeks since it can take as much as 60 days for loans to move from approval to settlement.
HSH.com predicts that borrowers who need a jumbo loan above the conforming loan limits will be directed to the private mortgage market, which could charge higher interest rates. After the end of the year, HSH.com mortgage analysts anticipate the potential for more competition among lender leading to greater availability of jumbo loans.
In the meantime, if you need to refinance a large home loan, it may be wise to consult with a lender soon to lock-in lower refinance rates.
