The average offering rate for a 15-year fixed loan also was unchanged at 3.59%, according to Freddie Mac, which asks lenders about the terms they are offering to solid borrowers with down payments of 20% or more. Start rates on popular types of variable home loans were slightly lower.
The markets are awaiting a key Federal Reserve meeting next week, when the central bank could decide to begin scaling back its economic stimulus program. The Fed has been buying $85 billion in Treasury and mortgage securities every month, and anticipation that it would begin tapering off the purchases this month has been a major factor in the rising rates.
The higher rates have choked off the mortgage origination business, resulting in layoffs at many home lenders. The Mortgage Bankers Assn. said Wednesday that seasonally adjusted applications for home loans dropped 13.5% last week, with refinance applications down 20% and purchase applications 3%.
The mortgage trade group said Thursday that applications for loans to buy new homes declined by 14% in August compared with July. Those figures did not include seasonal adjustments.
In another report Thursday morning, analysts at BMO Capital Markets cut their earnings estimates for four big regional banks and for No. 1 mortgage lender Wells Fargo & Co., saying revenue from home lending is falling faster than expected.
Freddie Mac asks lenders about the terms they would provide to borrowers who pay them less than 1% in upfront fees and discount points to obtain the loans. Borrowers typically are also required to pay for third-party services such as appraisals and title insurance, costs not included in the Freddie Mac survey.