Mortgage rates last week jumped to the highest level since the end of last year, causing a crash in the growing refinance demand the market had been seeing at the start of this year. That pushed total mortgage application volume down 10.9% compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, $832,750 or less, increased to 6.30% from 6.19%, with points increasing to 0.63 from 0.58, including the origination fee, for loans with a 20% down payment.
“Mortgage rates continued to move higher, driven by increasing Treasury yields as the conflict in the Middle East kept oil prices elevated, along with the risk of a broader inflationary shock. Mortgage rates increased across the board,” said Joel Kan, an MBA economist in a release.
Applications to refinance a home loan plunged 19% week-to week but were still 69% higher than the same week one year ago.
“Rates were around 20 basis points higher than they were two weeks ago, and this caused a reversal in refinance activity, particularly for conventional refinance applications, which decreased 27 percent over the week. Government refinances also declined but by 5 percent, as FHA rates have not increased quite as rapidly,” Kan added.
