Small Increase in Contract Mortgage Rates Leads to a Considerable Drop in Applications

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The number of mortgage applications in the United States fell significantly during the week ending June 13th. This decline is explained with the slight increase in the contract mortgage rates which was determined by the positive economic data. The drop reveals that consumers are quite sensitive to the movement of mortgage rates despite the improvement in the housing market and in the economy as a whole.

The average contract interest rate on 30-year fixed mortgages increased to 4.36% during the week ending June 13th from 4.34% during the previous week. The average contract rate in 30-year fixed jumbo loans went from 4.27% to 4.32%. The increase in the average contract rate for 5/1 adjustable rate mortgages was 0.02%. It went from 3.18% to 3.20%.

Refinance at
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The increases in the contract rates for the different types of home loans were from 0.02% to 0.05%. They are quite small indeed. At the same time, the decline in the number of mortgage applications was much bigger. They dropped by 9.2% from the previous week on a seasonally adjusted basis. On unadjusted basis, the decline was 10%.

The applications for refinancing experienced bigger drop than the ones for home purchase during the week ending June 13th. They went down by 13% from the previous week on a seasonally adjusted basis. The share of refinance applications shrunk from 54% during the previous week to 52%. For comparison, the number of mortgage applications for home purchases dropped by 5% on a seasonally adjusted basis. This number was 15% lower compared to the same week in 2013.

The number of mortgage applications has been following a downward trend during the otherwise busy spring house buying season and this trend will most likely remain. There are concerns and the demand for homes and mortgages will decline further during the year unless there is a major improvement in the economy.

Christian

Christian

Christian Calvin mortgage Christian is a contributing writer for Mortgage.info. He is a graduate from the University of Tennessee with a degree in Communications and a concentration in Broadcasting. Christian has served as vice-president for a privately-held company for more than 20 years. Additionally, he has also applied his writing and business knowledge to various websites with a focus on business and sports news . . . both of which are passions. Christian enjoys playing golf and spending time with his family and friends.

Contact: christian@mortgage.info
Christian

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