Mortgage interest rates climbed measurably this week, contributing to a reduction in application volume.
The average rates on 30-year fixed mortgages, which follow bond yields, climbed 11 basis points this week, to 7.6%, according to preliminary results of a survey by HSH Associates, Butler, N.J.
The average rate on a one-year adjustable mortgage rose to 4.65%, up 6 basis points from the previous week.
Lenders said that loan demand has slowed noticeably in recent weeks, but that they were not worried by the trend.
Taking a Breather
After a burst in refinancing activity earlier this year, "the industry needs the breathing room to catch up," said Karl Mendenhall, senior vice president at First Union, Mortgage Co., Charlotte, N.C.
He said applications at First Union are down 20% from this time last month. But refinancing activity is still more robust than usual, at 64% of total originations.
Terrance Hodel, chief executive of North American Mortgage Co., said his applications were down 5% to 7% over the past 10 days.
Rate Rise Shrugged Off
He too, said he was unconcerned by the rise in rates.
"We've had so many false bottoms here, it's hard to get excited."
He said rates were still favorable, noting that there is still more than $1 trillion in home mortgage loans with interest rates over 9%. Those mortgages, he said, were ripe for refinancing and should keep him busy.
"I'm not tempted to commit suicide at this time," he said.