Mortgage applications fell for a third straight week, dropping 7.3%, however most of the decrease was due to rising mortgage rates, which pushed down refinance volume.
For the week ended April 19, applications for refinances fell 11% while applications for purchases dropped 4%, according to the Mortgage Bankers Association’s (MBA) Weekly Applications Survey.
On an unadjusted basis, total volume decreased 6% compared with the previous week. Applications for purchases decreased 3% on an unadjusted basis but were 3% higher compared with the same week one year earlier.
The average rate for a 30-year fixed-rate mortgage, based on closings, was 4.46%, up from 4.44% the previous week.
“The 30-year fixed mortgage rate has risen 10 basis points in three weeks, and is now at its highest level in over a month,” says Mike Fratantoni, senior vice president and chief economist for the MBA, in a statement. “Borrowers remain extremely sensitive to rate changes, which is why there has been a 28 percent drop in refinance applications over this three-week period.
“Purchase activity also declined, but remains almost three percent higher than a year ago,” Fratantoni adds. “Borrowing costs have recently drifted higher because of ebbing geopolitical concerns, as well as signs of strengthening in the U.S. economy, including the recent data pointing to robust retail sales.”
Fratantoni adds that “the strong economy and job market is keeping buyer interest high, but rising mortgage rates could add pressure to the budgets of some would-be buyers.”
The refinance share of mortgage activity decreased to 39.4% of total applications, down from 41.5% the previous week.
The adjustable-rate mortgage (ARM) share of activity decreased to 6.4% of total applications.
The average rate for a 5/1 ARM was 3.92%, up from 3.88%.