Mortgage Rates Rise, Applications And Refinancing Drop

Purchase applications for home mortgages were down 3.0 percent in the July 22 week following the previous week's 2.0 percent decline, while refinancing applications, which tend to be even more sensitive to interest rates, fell a sharp 15.0 percent. The decrease brought the Purchase Index down to the lowest level since February, and the year-on-year gain in purchase applications was pared down to 12 percent from the prior week's 16 percent gain. Mortgage rates extended their rebound from three-year lows, with the average rate for 30-year fixed-rate mortgages on conforming loans ($417,000 or less) rising 4 basis points to 3.69 percent. The second weekly decline in purchase applications in tandem with increases in mortgage rates underscores the current dependency of the housing market on low-interest financing. Especially if rates have already bottomed, the Mortgage Bankers Association report indicates a slowdown in home sales growth, which had been robust in part thanks to extremely low and declining mortgage rates.