Mortgage Refinance, Home Purchase Loan Application Activity Slips

Home loan applications fell throughout the nation last week, weighed down by a plunge in demand for mortgage refinancing as home loan rates reached seven-month highs, according to an industry survey.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity for the week ending May 25 fell by 7.3 percent to 636.4.

Borrowing costs on 30-year fixed-rate mortgages, excluding points, averaged 6.32 percent, up 0.09 percent from the previous week and marking the highest average since October 20, when they hit 6.36 percent.

However, mortgage interest rates were still well below year-ago levels of 6.66 percent.

The group’s index of mortgage refinance applications dropped 13.0 percent to 1,874.6, the lowest since January, when it touched 1,848.8.

The refinancing share of overall mortgage activity decreased to 39.7 percent of total applications from 42.3 percent the previous week.

The average contract rate for 15-year mortgages, a popular option for those looking to refinance home loans, also increased, rising up to 6.05 percent from 5.96 percent.

The adjustable-rate mortgage activity, meanwhile, decreased to 17.7 percent of total home loan applications from 18.1 percent the previous week.

The MBA’s seasonally adjusted purchase index fell 2.5 percent to 427.0. The index, however, was above year-ago levels of 395.5. The index is considered a timely gauge of home sales, which have slumped so far this year.

SOURCE: Reuters