As rates pressed higher last week, it seems to have been enough to make would-be home shoppers hit the pause button. The Mortgage Bankers Association reported Wednesday that loan application volume—for both refinancings and home purchases—dropped 0.2 percent for the week and are now 0.8 percent lower than a year ago.
Applications for both refinances and home purchases stalled last week, with applications to refinance dropping 0.3 percent and applications to purchase a home unchanged from the prior week. Applications to refinance, which tend to be the most rate-sensitive, are now 16 percent lower than a year ago and are at the lowest share of overall mortgage applications since September 2008. The incentive to refinance was shaken last week as the 30-year fixed-rate mortgage rose to its highest average since September 2013—averaging 4.73 percent, the MBA reports.
“Treasury rates increased significantly last week, partly driven by the market’s reaction to more hawkish comments from key Fed officials and positive economic news on strong retail sales and declining jobless claims,” says Joel Kan, an MBA economist.
Despite last week’s pause in mortgage applications for home purchases, home buyer applications are still 11 percent higher than a year ago.
"Whereas rates had leveled off and even improved somewhat during March and early April, they've quickly shown more volatile colors," writes Matthew Graham, chief operating officer of Mortgage News Daily.
Mortgage rates continued to climb this week, and some lenders say they are now a quarter percentage point higher than 2018’s top levels.
Source: “Weekly Mortgage Applications Stall as Rates Make Sharp Move Higher,” CNBC (April 25, 2018)
