Mortgage Applications Fall as Interest Rates Rise

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Long-term fixed rates have been on the up escalator as fears over inflation push the market for mortgage loans higher. Mortgage applications tanked by almost 23% over last week as higher rates on 30-year fixed products; as well as an aversion to better priced mid-term ARM products (such as a 10-year ARM) keep borrowers (those that are left) on the side line. The application level is still higher by a third over 2007 levels.

From Market Watch on the drop in mortgage applications:

Mortgage applications filed last week dropped a seasonally adjusted 22.6% from the previous week, as interest rates on fixed-rate mortgages increased, the Mortgage Bankers Association reported Wednesday.

Applications for loans to refinance existing mortgages were down 27.9% on a week-to-week basis, while applications for mortgages to purchase homes were down a seasonally adjusted 11.5%, according to the survey.

Market Watch’s average mortgage interest rate watch reported the following aggregated rate information:

Average interest rates for 30- and 15-year fixed-rate mortgages increased last week to 6.09% and 5.55%, respectively, up from 5.72% and 5.18% in the previous week. But the average rate on one-year ARMs didn’t change, remaining at the 5.72% seen in the Feb. 8 week.