The Mortgage Bankers Association's seasonally adjusted index of home-loan application activity rose 6.6 percent to 666.5 for the week ended June 8. The index of purchase activity advanced 7.2 percent, while refinancing activity bumped up 5.6 percent.
Meanwhile, mortgage rates climbed to an 11-month high, with the average 30-year fixed mortgage rate hitting a 10-month high of 6.84 percent, according to Bankrate.com's weekly national survey of large lenders, the average 30-year fixed mortgage has an average of 0.27 discount and origination points.
The average 15-year fixed rate mortgage popular for refinancing increased by a similar amount, to 6.53 percent. Adjustable rate mortgages were no different, with the average one-year ARM nosing higher to 6.19 percent and the 5/1 ARM bounding up to 6.67 percent.
Mortgage rates staged a significant increase over the past week, and it came in the absence of any major economic data. Instead, rising interest rates overseas proved to be the catalyst, even though the Federal Reserve stands pat here at home, Bankrate said. Higher interest rates and strong economic growth in other parts of the world could force Uncle Sam to pay higher yields to attract funds from foreign investors.
Fixed mortgage rates have increased more than one-half percentage point since mid-May. At the time, the average 30-year fixed mortgage rate was 6.32 percent, meaning that a $165,000 loan would have carried a monthly payment of $1,023.46. With the average 30-year fixed rate now 6.84 percent, the same loan originated today would carry a monthly payment of $1,080.08.
Fixed mortgage rates still remain the better refinancing alternative for adjustable rate borrowers facing sharp payment adjustments.
Source: Bankrate.com, Mortgage Bankers Association
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