Mortgage Applications Fell Last Week as Interest Rates Rose

U.S. mortgage applications declined last week, dragged down by sinking demand for home refinancing with long-term interest rates at their highest level since October, an industry group said on Wednesday.

The Mortgage Bankers Association's mortgage application index slipped 1.7 percent to a seasonally adjusted 625.3 in the week ended June 1.

A rise in applications to buy homes was overshadowed by the drop in refinancing applications.

The MBA's seasonally adjusted purchase index rose 1.5 percent to 433.6, but the refinancing gauge fell 6.1 percent to 1,757.1 in the June 1 week. The refinancing measure has not been lower since 1,640.4 at the end of last year.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, rose 0.03 percentage point to average 6.35 percent, its peak since 6.36 percent was reached in the Oct. 20 week.

Refinancings represented 38 percent of total mortgage applications, down from 39.7 percent the prior week and the lowest share since July.

On a four-week moving average, which smooths out volatility, all three of the MBA's seasonally adjusted indexes have fallen.

The mortgage applications index, also called the market index, is down 2.1 percent; the purchase index is off 0.3 percent and refinance index is down 4.3 percent.