Mortgage Demand From Homeowners Recovers as Applications Rise for the Second Week in a Row

Home loan applications rose slightly by 1.1% for the second consecutive week, following a larger 11% increase the previous week, according to the Mortgage Bankers Association. The refinance index fell 0.4% but remains 44% higher than a year ago. Refinances accounted for 36.4% of applications, down from 37.1%. Adjustable-rate mortgages dropped to 7.4%, while FHA loans rose to 17.4%, VA loans edged up to 13.4%, and USDA loans held steady at 0.5%.

Contract rates

The average interest rate for 30-year fixed-rate mortgages with conforming loan balances (up to $806,500) rose slightly to 6.86% from 6.84%, while points remained steady at 0.68 (including the origination fee) for loans with an 80% loan-to-value (LTV) ratio. The effective rate also increased compared to last week. For 30-year fixed-rate jumbo loans (over $806,500), the interest rate decreased marginally to 6.85% from 6.86%, with points rising to 0.49 from 0.46 (including the origination fee) for 80% LTV loans. The effective rate for jumbo loans increased from the previous week.

For 15-year fixed-rate mortgages, rates fell to 6.12% from 6.17%, with points dropping to 0.59 from 0.65 for 80% LTV loans, lowering the effective rate. Meanwhile, 5/1 ARM rates rose to 6.09% from 5.97%, with points increasing to 0.74 from 0.31 for 80% LTV loans, raising the effective rate. (A 5/1 ARM has a fixed rate for five years, then adjusts annually).

Mortgage rates calculated

Mortgage rates are calculated by various factors in the economy, and the length of your loan will also figure into which mortgage rate you qualify for. The 30-year mortgage rate is benchmarked to the rate of the 10-year Treasury note, according to Fannie Mae. As the rate on the 10-year Treasury note moves, mortgage rates follow. The rate on the 10-year Treasury note is determined by expectations for shorter-term interest rates in the economy over the duration of a bond, plus a term premium.

Source: realtor.com