Mortgage activity drops as interest rates rise

U.S. mortgage activity dropped by 3 percent on an unadjusted basis in the week that ended Friday, the Mortgage Bankers Association said Wednesday. The Mortgage Bankers Association said refinancing activity dropped even further, falling by 5 percent, as interest rates on long-term loans rose in the week. Mortgage activity has declined in eight of the past 10 weeks with interest rates climbing largely on the speculation the the U.S. Federal Reserve will soon begin to unwind its $85 billion per month asset purchasing program, which has kept interest rates suppressed. Interest rates were broadly higher in the week. For 30-year, fixed-rate loans with balances under $417,500, the average rate rose from 4.68 to 4.8 percent with points dropping from 0.42 to 0.41. Interest rates for jumbo loans -- loans of $417,500 or larger -- rose from 4.74 percent to 4.78 percent with points rising from 0.28 to 0.34. Average interest rates on 30-year fixed-rate backed by the Federal Housing Administration rose from 4.4 percent to 4.52 percent, the highest rate since July 2011, with points climbing from 0.21 to 0.32. The average interest rate for 15-year, fixed-rate loans increased from 3.71 percent to 3.84 percent with points rising from 0.32 to 0.35. The average interest rate for 15-year, fixed rate loans is at the highest it has been since April 2011. For short-term adjustable rate loans, the average interest rate rose to 3.5 percent, the highest rate since April 2011, with points falling from 0.48 to 0.37.