The highest interest rates in about a month and high home prices took their toll on the mortgage business last week.
Total mortgage application volume slipped 2.5 percent from the previous week and 12 percent from a year ago, according to the Mortgage Bankers Association's seasonally adjusted report.
While homebuyers are less sensitive to weekly rate moves, mortgage applications to buy a home fell for the third straight week to the lowest level in a month. Application volume for homebuyers was down 3 percent for the week and just 1 percent higher than a year ago. Home sales have been weakening for months as high prices hit affordability and low inventory limits choices.
"Application activity remained slow, which is in line with weak trends in other housing indicators such as home sales and housing starts," said Joel Kan, MBA vice president of economic and industry forecasting.
Mortgage applications to refinance a home loan, which are highly sensitive to interest rate moves, fell 2 percent for the week and were nearly 29 percent lower than a year ago, when rates were nearly three-quarters of a percentage point lower.
Despite the drop, the refinance share of mortgage activity increased to 37.1 percent of total applications from 36.8 percent the previous week. The adjustable-rate mortgage share of activity increased to 6.4 percent of total applications.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased to 4.84 percent from 4.77 percent, with points remaining unchanged at 0.45 (including the origination fee) for loans with 20 percent down payments.
"Rates rose slightly last week due to easing trade tensions between the U.S. and Europe, and signals on Japanese and European monetary policy," said Kan.
Mortgage rates moved higher again to start this week but then fell back Tuesday. Volatility could increase at the end of the week, when the monthly employment figures are scheduled for release.