For five straight weeks, mortgage interest rates have trended higher, and thrown a wet blanket on what had been a booming refinance market.
Total mortgage application volume fell 1.2 percent on a seasonally adjusted basis last week from the previous week, according to the Mortgage Bankers Association.
"Economic news in recent weeks has been mostly positive, especially in terms of GDP growth and increasing wages," said MBA economist Joel Kan. "This raises the likelihood of the Fed raising rates at its December meeting, but also indicates stronger domestic economic fundamentals, which pushes rates higher."
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to its highest level since June, 3.77 percent, from 3.75 percent, with points increasing to 0.38 from 0.36 (including the origination fee) for 80 percent loan-to-value ratio loans.
Mortgage applications to refinance, which are highly rate-sensitive, fell 3 percent for the week, seasonally adjusted, to the lowest level since May. Mortgage applications to purchase a home managed to eke out a 1 percent gain for the week and are now 11 percent higher than the same week one year ago.
"Applications for home purchase loans increased for only the second time in the past six weeks, but purchase activity in 2016 has generally been stronger than in 2015," Kan said.
Mortgage rates are the least of homebuyers' worries right now. Low inventory and home heating prices are the biggest barriers to buying right now, especially for first time home shoppers.
A monthly sentiment survey from Fannie Mae reported more consumers saying they believe now is a good time to buy and a good time to sell a home — increasing from the previous month. Fewer, however, expect mortgage rates to fall and fewer are confident about not losing their job.
"Recent erosion in sentiment likely reflects, in part, enhanced uncertainty facing consumers today," said Doug Duncan, senior vice president and chief economist at Fannie Mae.
