As with every Wednesday, the Mortgage Bankers Association released their Weekly Mortgage Applications Survey this morning. Steadily increasing mortgage rates appear to be sucking what life there was out of the anemic housing market.
Total mortgage applications dropped 2.3 percent from the week prior, with refinance applications dropping by 0.7 percent, and with purchase applications falling by 5 percent.
Michael Fratantoni, the MBA’s VP of research and economics commented:
“Not surprisingly, with rates up more than half a percentage point over the past month, refinance activity has declined sharply. Home purchase applications dropped this week following three weeks of increases, but remain near levels last seen in early May”.
According to Freddie Mac, mortgage rates have increased every week for the last month, and are now close to their six month high. The average rate on a 30 year fixed rate mortgage has gone from 4.17 percent to 4.61 percent over the past month.
There was some speculation that rising mortgage rates would have a short-term beneficial effect on the housing market, as fence-sitting potential purchasers were prompted to make purchases before rates increased further. It appears that this short-term bump may have ended. We will have to see what occurs over the next month or so before we can make any real definitive conclusions.
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