Mortgage rates finally broke out of their tight range last week, and borrowers retreated in force.
Total mortgage application volume decreased 7.3 percent on a seasonally adjusted basis from the previous week, according to the Mortgage Bankers Association.
Refinance volume took the biggest hit, since borrowers looking to save on their monthly payments are far more rate sensitive. Applications to refinance a home loan decreased 8 percent last week, seasonally adjusted, from the previous week to the lowest level since June. Refinance volume is still 26 percent higher than the same week one year ago, when mortgage rates were slightly higher.
"Mortgage rates increased to their highest level since June last week as comments by some Fed officials made it appear that the Federal Reserve is closer to raising rates," said Michael Fratantoni, chief economist for the MBA. "The average refi loan size fell to its lowest level in three months as more jumbo borrowers left the market."