Mortgage applications drop 4.7% on highest rates in 9 months

Rising mortgage rates are taking their toll on both home buyers and home owners looking to save on their monthly payments.

Total mortgage application volume fell 4.7 percent for the week ending June 26 on a seasonally adjusted basis from one week earlier, according to the Mortgage Bankers Association (MBA). That is the lowest level since January 2, 2015.

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Applications to refinance, which are most interest rate sensitive, fell 5 percent week-to-week to the lowest level since December of last year. They continue to make up a smaller share of total applications, falling to 48.9 percent. Mortgage applications to purchase a home fell 4 percent for the week but are still 14 percent higher than the same week one year ago.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) rose to 4.26 percent—its highest level since October 2014—from 4.19 percent. Points fell to 0.33 from 0.38 (including the origination fee) for 80 percent loan-to-value ratio loans.

"Rates drifted up further last week due to stronger U.S. economic data, even with the worries about a potential default of Greek debt this week," said Michael Fratantoni, chief economist for the MBA.

Rates pulled back Tuesday, after the situation in Greece escalated, but the next two days will be "critical" according to Matthew Graham of Mortgage News Daily.

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"Greece is only one medium-sized brush-stroke in a much larger painting. The bigger, more colorful strokes will come from things like the employment data on Thursday. If the numbers are stronger than expected, this recent foray toward lower rates may take an abrupt turn. Either way, we still haven't seen an aggressive enough push lower to rule out the long term trend toward higher rates," wrote Graham.