Mortgage Applications Fall As Rates Rise

ByJohn S. McClenahen One week's numbers do not make a trend. But data from the Washington, D.C.-based Mortgage Bankers Association of America (MBAA) suggest that home refinancing, which has been a major economic stimulus so far in the U.S. recovery from recession, may have topped out. MBAA's Market Composite Index of loan applications, a measure of mortgage loan applications for home purchases and refinancings, fell 24.3% to 972.4 on a seasonally adjusted basis for the week ending July 25. "The drop in overall applications is due almost entirely to the very large drop in refinance activity," says Jay Brinkmann, MBAA's vice president of research and economics. "Refinance applications have fallen to the lowest level seen this year and are down more than 50% from where they were just four weeks ago -- not surprising given the sharp increases in rates since mid-June." Last week the average contract interest rate for a 30-year fixed-rate mortgage was 5.87%, up from 5.72% the previous week. The average contract interest rate for a 15-year fixed-rate mortgage was 5.18%, up from 5.10%, and the average contract interest rate for a one-year adjustable-rate mortgage was 3.32%, up from 3.18%.