Home loan borrowers moved to the sidelines amid a sharp rise in interest rates last week.
Total mortgage application volume fell 3.5 percent on a seasonally adjusted basis for the week ending May 8th from one week earlier, according to the Mortgage Bankers Association (MBA). Volume is still 14 percent higher than a year earlier, but that annual comparison has been shrinking for several weeks.
Applications to refinance, which are the most rate-sensitive, fell 6 percent week-to-week and have dropped 16 percent in the past four weeks; they are still 15 percent higher than a year earlier as interest rates were slightly higher in May of 2014. The refinance share of mortgage activity decreased to 51 percent of total applications, its lowest level since May 2014.
That comes as the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.00 percent, its highest level since March 2015, from 3.93 percent, with points increasing to 0.36 from 0.35 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans, according to the MBA survey.