U.S. mortgage applications fell last week, weighed down by a plunge in demand for home
refinancing as interest rates reached seven-month highs, an industry group said Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications for the week ended May 25 dropped 7.3% to 636.4.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.32 percent, up 0.09 percentage point from the previous week and its highest since the week ended Oct. 20, when it stood at 6.36%.
Interest rates, however, were well below year-ago levels of 6.66%.
The group's seasonally adjusted index of refinancing applications dropped 13% to 1,874.6., the lowest since January, when it touched 1,848.8.
The refinance share of mortgage activity decreased to 39.7% of total applications from 42.3 percent the previous week.
The average contract rate for 15-year mortgages also increased, rising to 6.05% from 5.96%.
The adjustable-rate mortgage activity decreased to 17.7% of total applications from 18.1% the previous week.
The MBA's seasonally adjusted purchase index fell 2.5% to 427.0. The index, however, was above its year-ago level of 395.5. The purchase index is considered a timely gauge of U.S. home sales.