Rising interest rates slowed refinancing demand and whet homebuyers' appetites for adjustable-rate mortgages in July, according to Ellie Mae's monthly survey of mortgage loan applications.
The average interest rate on a 30-year fixed mortgage jumped to 4.4% in July from 3.9% the previous month, the survey reported Wednesday. That drove down
Higher interest rates helped boost the popularity of adjustable-rate mortgages, Ellie Mae president and chief operating officer Jonathan Corr said in a press release. ARMs made up 5.2% of loan applications in July, compared to 4% last month and 3.1% a year ago.
"Banks are definitely doing more ARMs because they're selling the consumer what they're asking for, which is a lower monthly payment," Bob Caruso, an executive managing director at Lender Processing Services, told
Lenders also appear to be easing credit standards for prospective homebuyers. Approved applicants' average FICO credit scores fell to 737, down from 742 in June. That's the lowest average credit score since the survey began in August 2011. "Lenders are willing to accept slightly more risk to maintain volume," Corr said in the press release.
Ellie Mae's Origination Insight Report samples about 44% of the roughly three million loan applications that run through its mortgage management software.