Mortgage Rates Rise, Sending Applications Down

Mortgage Weekly Update

Mortgage applications fell this week, dropping 3.3% from the week prior, according to the latest survey from the Mortgage Bankers Association. Refinances fell the most, dipping 5% over the week, while purchase applications dropped 1%.

Both types of activity are still well above last year’s numbers, with refis up 38% over 2019 and purchase loans 38% higher. 

According to Joel Kan, associate vice president of economic and industry forecasting, the decline in activity is likely due to mortgage rates, which saw a slight increase last week, rising from 3.06% to 3.13% on 30-year, fixed-rate loans.

“Positive economic data reported last week on retail sales, as well as a large U.S. Treasury auction, drove mortgage rates to their highest level in two weeks,” Kan said. “The rise in rates dampened refinance activity, but purchase applications continued their strong run and were 27% higher than a year ago — the third straight month of year-over-year increases.”

In the purchase category, conventional loans saw a major surge, while government-back loans actually declined. Both the share of FHA loans and VA loans fell for the week. USDA loans remained steady at 0.6% of all mortgage activity.

More in mortgage and housing news

  • Mortgage delinquencies jumped in the second quarter of the year. According to MBA, the overall delinquency rate was up 386 basis points for the quarter and 369 points from the same time a year ago.
  • Forbearances decreased again. MBA’s data shows the share of loans in forbearance fell to 7.21% this week, down from 7.44%. About 3.6 million homeowners are currently on a forbearance plan.
  • According to the U.S. Census Bureau, housing starts were up a whopping 22.6% in July. Over the year, the jump was even bigger at 23.4%. Building permits are also up, rising 18.8% for the month and 9.4% over the year.

This week in mortgage rates

Mortgage rates rose on 30-year and 15-year, fixed-rate loans, as well as on jumbo loans, according to MBA’s survey. Rates dipped slightly on FHA loans and adjustable-rate mortgages.

Here’s a look at how rates shook out for the week:

  • All 30-year, fixed-rate loans: 3.13%, 0.36 points
  • Jumbo 30-year, fixed-rate loans: 3.41%, 0.35 points
  • FHA 30-year, fixed-rate loans: 3.16%, 0.27 points
  • 15-year, fixed-rate loans: 2.73%, 0.36 points
  • 5/1 ARMs: 2.95%, 0.41 points

Check back here next week for the most up-to-date mortgage rates.

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By Aly Yale / August 21st, 2020 / Categories: , / Tags:

Aly Yale

Aly J. Yale is a mortgage and real estate writer based in Houston. Connect with her at AlyJYale.com or on Twitter at @AlyJwriter.