Mortgage Volume Decreases as Rates Rise

By Amy Hoak, MarketWatch

RISMEDIA, May 31, 2007-(MarketWatch)-The volume of mortgage applications decreased last week as interest rates continued to rise, the Mortgage Bankers Association reported Wednesday.

Overall, applications decreased a seasonally adjusted 7.3% for the week ended May 25, compared with the week before. Applications were up 17% as compared to the same week in 2006.

Applications filed to refinance existing mortgages decreased 13% on a week-to-week basis, the MBA’s survey showed.

Home purchase applications were down a seasonally adjusted 2.5% for the week.

Refinancings made up 39.7% of all mortgage applications, down from 42.3% in the previous week, while adjustable-rate mortgages fell to 17.7% from 18.1%.

According to the survey, the average interest rate on 30-year fixed-rate mortgages increased to 6.32%, up from the prior week’s 6.23% average. The average rate on 15-year fixed-rate mortgages, popular as a refinancing vehicle, also was higher, up to 6.05% from 5.96%.

One-year ARMs averaged 5.74% for the week, up from 5.72% last week.

The four-week moving average of mortgage applications activity was off 0.8%, mostly reflecting a downturn in refinancings.

The MBA survey covers about half of all U.S. retail residential mortgage originations.

Amy Hoak is a MarketWatch reporter based in Chicago.

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