James Pethokoukis

Politics and policy from inside Washington

Higher rates and refinancing

June 13, 2009

Fear of massive deficits and inflation may or may not be driving up interest rates, but the impact of the rate rise is not up for dispute. This from Barclays:

Mortgage rates jumped to their highest since November, stifling refinancing

The Mortgage Bankers Association’s index of mortgage applications fell 7.2% w/w in the week ending June 5, marking the third consecutive weekly decline. The downturn owes to a sharp drop in refinancing activity as a result of higher mortgage rates.

The index of refinancing applications fell 11.8% in the latest week, pushing the index to the lowest level since November of last year (Figure 1). The index of purchase applications inched up 1.1%, leaving the four-week moving average up 0.5%.

The average rate on the 30y conforming mortgage (as measured by the MBA) jumped 32bp to 5.57%, also the highest since November. Mortgage rates have jumped more than 100bp from the trough of 4.62% at the end of April.

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
  •