Rising Rates Slowing Purchase Demand

Mortgage application activity continued to slide last week, down 4 percent on a seasonally adjusted basis from the week before, the fourth straight week the Mortgage Bankers Association's (MBA's) Market Composite Index has fallen. The index, a measure of application volume, contained an additional adjustment to account for the July 4 holiday. On an unadjusted basis the index was down 23 percent from the week ended June 28.

The Refinance Index was down 4 percent from the previous week and refinancing accounted for 64 percent of total applications, a slight week-over-week decline. Thirty-five percent of refinancing applications were for Home Affordable Refinancing loans, up from 34 percent the previous week.

 Refinance Index vs 30 Yr Fixed

The seasonally adjusted Purchase Index decreased 3 percent from one week earlier. The unadjusted Purchase Index was 23 percent below that of the previous week and was 5 percent higher than the same week one year ago.

Purchase Index vs 30 Yr Fixed

 All average contract interest rates reported from MBA's Weekly Mortgage Applications Survey hit near two year high levels and effective rates also all increased. The average contract rate for a 30-year fixed-rate mortgages (FRM) with a balance of $417,500 or less jumped 10 basis points to 4.68 percent. Points rose to 0.46 from 0.43. The jumbo FRM (balances over $417,500) rose from 4.68 percent to 4.86 percent with points down from 0.38 to 0.37. The rates for both conforming and jumbo FRMs were at the highest level since July 2011.