Mortgage applications drop 5.2% on higher interest rates
Mortgage applications fell 5.2% this past week as mortgage rates rose in response to the Federal Reserve ending its quantitative easing program. For the week ending July 1, the market composite index – a measure of loan application volume – fell 5.2% on a seasonally adjusted basis, the Mortgage Bankers Association said. On an unadjusted basis, the index fell 5.1%. Meanwhile, the refinance index fell for the third-consecutive week, dropping 9.2% over the previous week and the seasonally-adjusted purchase index grew 4.8%. "Stronger economic data towards the end of the week coupled with the end of the Fed's second round of quantitative easing helped bring mortgage rates to their highest level in over a month," said Michael Fratantoni, MBA's vice president of research and economics. "Refinance activity, already constrained by a smaller pool of eligible borrowers, declined in response to the higher rates, but purchase applications picked up appreciably in the week before the July 4th holiday." The four-week moving averages for the market index and refinance index fell 0.5% and 1.1%, respectively, while the four-week moving average for the purchase index is up 0.8% on a seasonally adjusted basis. The refinance share of mortgage activity fell to 66.4% of total applications, compared to 69.5% from the previous week. The 30-year, fixed-rate mortgage increased to 4.69%, up from 4.46%, while the 15-year, FRM grew to 3.79%, up from 3.64%. Write to Kerri Panchuk.