Loan Applications Increase Despite Spike in Rates

Mortgage rates climbed in the week ending July 17, yet the demand for loans still managed to increase during the week, according to a weekly industry survey.

The Mortgage Bankers Association said average rates for a 30-year mortgage rebounded from 5.05% to 5.31% last week, erasing the improvement seen in the prior week when rates fell 29 basis points. The jump in rates didn’t put a halt to refinancing or home purchases, however, as both indexes continued moving up from the seven-month low seen three weeks ago.

The Market Composite Index ― which tracks the volume of mortgage applications ― increased 2.8% in the week, moderating the 4-week average to -1.0%.

Refinance-related loans moved up 4.0% in the week and accounted for 55.5% of all loans. In the prior week refinancing jumped 17%. The Purchase Index edged up 1.3% in the week, though on a 4-week average purchases are 1.7% lower. 

“It’s been stuck in this low-five range for a number of weeks,” commented chief economist Donald Rissmiller from Strategas Research Partners last week. With the Federal Reserve continuing with its accommodative policy for the medium-term future, rates are likely to continue in that range.

Mortgage rates vary across the country but the state average is below 6% ― an historically low rate ― in all 50 states. According to a report from Zillow.com published yesterday, lenders in Alabama offer the lowest mortgage rate at 5.06%, while rates in Maine are currently the highest at 5.94%.