Mortgage Apps: Sharp Drop As Rates Bounce

Bottom Line:  Mortgage rates rose sharply last week, putting a damper on mortgage applications and highlighting how sensitive homebuyers and potential refinancings remain to rates. The effective average 30-year mortgage rate jumped nearly a 1/4 point to 6.60%, responding to increased Treasury yields and wider secondary mortgage market spreads. Before the sudden rebound in mortgage rates, applications appeared to be finding a bottom. But that is now in question and bears close watching as rate and spread volatility have started to increase again.The MBA Mortgage Application Index FELL -7.7% to 230.0, ABOVE the 13-week average of 218.0 but -57.1% BELOW the year-ago level. Non-seasonally adjusted the index FELL -7.3%.The Purchase Index FELL -5.5% to 180.0, BELOW the 13-week average of 181.0 and -35.6% BELOW the year-ago level.The Refinancing Index FELL sharply, DOWN -12.5% to 480.0, ABOVE the 13-week average of 397.0 but -75.8% BELOW the year-ago level.The effective (adjusted for points paid) 30-year mortgage rate ROSE sharply, UP 24bps to 6.6%, ABOVE the 13-week average of 6.57% and 58bps ABOVE the year-ago level.Current coupon yields in the secondary market were up 42.0 bps last week, closing at 5.31%, and were up 4.0 bps this week through Tuesday.