Total mortgage applications, including both refinancing and home-purchase loans, plunged 1.5 percent last week (May 11th) from the week prior on a seasonally adjusted basis as mortgage interest rates continued to pulse up, the MBA (Mortgage Bankers Association) reports in its weekly mortgage market survey.
Applications for home acquisitions, viewed as a gauge of future home buying activity, fell 4 percent from the previous week to its lowest level since April. Yet, home buying applications are still 11 percent higher than the same week one year ago.
“The drop this week may indicate borrowers being wary of the recent run-up in mortgage rates,” said Mike Fratantoni, chief economist for the MBA .
The MBA reports that the 30-year fixed-rate mortgage averaged 4.04 percent last week, its top level since December 2014 and up from 4 percent the week prior.
According to Freddie Mac’s deputy chief economist Len Kiefer, “We’re likely to continue to see these mortgage rate swings as market participants try to anticipate Fed timing around rising short-term interest rates,” .. . “Unfortunately, prospective home buyers may experience bouts of affordability shock in many housing markets. So far, it’s been low mortgage rates that have helped to keep home-buyer affordability strong in the face of rising house prices, while income growth remains stagnant.”
Mortgage applications for refinancing have been gradually dipping over the past few weeks as interest rates have risen. Last week, applications for home refinances stayed basically flat, up just 0.3 percent for the week.