PhotoApplications for mortgages have now fallen for a fourth consecutive week.

Data released by the Mortgage Bankers Association (MBA) show applications were down 9.2% in the week ending November 11, as contract interest rates rose to levels unseen -- in some cases -- since early this year

The Refinance Index plummeted 11% from the previous week to its lowest level since March 2016, with refinance share of mortgage activity dipping to 61.9% of total applications from 62.3% the week before.

The adjustable-rate mortgage (ARM) share of activity rose to 4.7% of total applications, the FHA share increased to 12.2% from 11.6% a week earlier, the VA share was 12.6%, and the USDA share of total applications slipped to 0.6% from 0.7% the week prior.

Contract interest rates

  • The average contract interest rate for 30-year fixed-rate mortgages (FRMs) with conforming loan balances ($417,000 or less) rose 18 basis points -- from 3.77% to 3.95% -- its highest level since January, with points increasing to 0.39 from 0.38 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate increased from last week.
  • The average contract interest rate for 30-year FRMs with jumbo loan balances (greater than $417,000) increased to its highest level since January -- 3.89%, from 3.75% -- with points decreasing to 0.26 from 0.27 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
  • The average contract interest rate for 30-year FRMs backed by the FHA shot up 12 basis points to 3.73%, its highest level since April, with points decreasing to 0.28 from 0.35 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
  • The average contract interest rate for 15-year FRMs rose to its highest level since March -- 3.15% from 3.03% -- with points decreasing to 0.29 from 0.38 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
  • The average contract interest rate for 5/1 ARMs surged 19 points to 3.11%, its highest level since March, with points decreasing to 0.42 from 0.47 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.

"Following the election, mortgage rates saw their biggest week-over-week increase since the taper tantrum in June 2013, and reached their highest level since January of this year,” said MBA President and CEO David H. Stevens. “Investor expectations of faster growth and higher inflation are driving the jump up in rates, and rates have now increased for five of the past six weeks, spurring a commensurate drop in refinance activity."

The "taper tantrum," according to Investopedia, is the term used to refer to the surge in U.S. Treasury yields, which resulted from the Federal Reserve's use of tapering to gradually reduce the amount of money it was feeding into the economy.

It began when investors panicked in reaction to news of this tapering and drew their money rapidly out of the bond market, which increased bond yields The "taper tantrum," according to Investopedia, is the term used to refer to the surge in U.S. Treasury yields, which resulted from the Federal Reserve's use of tapering to gradually reduce the amount of money it was feeding into the economy.

It began when investors panicked in reaction to news of this tapering and drew their money rapidly out of the bond market, which increased bond yields drastically.

The survey covers over 75% of all U.S. retail residential mortgage applications.


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