GO
Loading...

Enter multiple symbols separated by commas

Borrowers defy logic with mortgage rates

Mortgage activity finally responded to lower interest rates but just as rates began to rise again.

Total mortgage applications surged 10.3 percent on week on a seasonally adjusted basis, according to a weekly survey from the Mortgage Bankers Association (MBA).

The rise comes as the average contract interest rate for 30-year fixed rate mortgages with conforming loan balances ($417,000 and under) increased to 4.34 percent from 4.26 percent the previous week. Rates had been falling steadily but didn't spur much activity. This suggests a time lag to act which may have cost borrowers extra money.

Read MorePending home sales up just 0.4% in April, missing expectations

"We could have held out some hope that markets were just digesting last week's big events and that rates might still snap back lower," wrote Matthew Graham of Mortgage News Daily in an analysis of the latest rate moves. "Today builds a case against any quick moves lower, and begins to make last week's only positive day for rates look like an outlier in an otherwise determined trend higher."

Applications to refinance a mortgage increased 11 percent on week but are still down 54 percent on year.

"Although rates increased last week, the level of rates are still low, with rates forecasted to go higher, so it is not surprising that refinance volume picked up," said Michael Fratantoni, the MBA's chief economist.

Read MoreLower rates fail to boost mortgage activity

Applications for loans to purchase a home rose 9 percent on week and are down 13 percent on year.

At an investor conference Tuesday the CFO of Wells Fargo, the nation's largest mortgage lender, said "people just aren't buying homes at the pace" the bank expected.

Contact Real Estate

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    Please choose a subscription

    Please enter a valid email address
    To learn more about how we use your information,
    please read our Privacy Policy.
  • Diana Olick

    Diana Olick serves as CNBC's real estate correspondent as well as the editor of the Realty Check section on CNBC.com.

Home prices and supply map

  • Track the latest moves in sales, prices and inventory in some of the largest housing markets across the country.

Latest Special Reports

  • From left: Sergey Brin, Dick Costolo, Ryan Seacrest

    Code Conference, from those who produced D: All Things Digital Conference, addresses the impact of digital technology on our lives and businesses.

  • Financial Advisor

    Featuring CNBC's Financial Advisor Council, this video series will aim to educate investors with straightforward financial advice.

  • Waitress tablet

    Trailblazers leveraging the power of technology and innovation to grow their business—and disrupt the competition.