Mortgage Purchase And Refinancing Applications Fall On Rising Interest Rates

Under continuing pressure from rising interest rates, purchase applications for home mortgages fell a seasonally adjusted 2 percent in the May 18 week. The fourth weekly decline in a row shrank the year-on-year gain in purchase applications to 3 percent. Applications for refinancing, which tend to be even more sensitive to interest rate fluctuations, fell 4 percent from the prior week to their lowest level since December 2000. The refinance share of mortgage activity fell 0.2 percentage points to 35.7 percent. The average interest rate on 30-year fixed rate conforming mortgages ($453,100 or less) rose 9 basis points from the prior week to 4.86 percent, the highest level since April 2011. Higher financing costs are taking their toll on mortgage activity, which should normally have a negative impact on the housing market, but this has not been reflected in government reports, which have so far pointed to strength rather than weakness. Later this morning, the release of new home sales data for April will offer further insight into the state of the housing market.