The number of mortgage applications filed in the United States fell 2.7% from a week earlier during the period ending March 23, according to the Mortgage Bankers Association.
Meanwhile, refinancing activity fell for the sixth consecutive week.
The MBA market composite index, which measures loan application volume, fell as the refinance index declined 4.6%, showing a sharp drop in refinancing activity as the refinance share of all mortgage activity fell to 71.9% from 73.4%, its lowest level since July.
The sudden decline in refinancing is tied to a 12% drop off in government refinance activity, the MBA said.
At the same time, the seasonally adjusted purchase index grew 3.3% from a week earlier.
Interest rates also rose with the 30-year, fixed-rate mortgage on a conforming loan balance increasing to 4.23% from 4.19%, while the average contract interest rate for a 30-year, FRM on a jumbo loan grew to 4.54%, up from 4.49%.
In addition, the 30-year, FRM backed by the FHA increased from 3.93% to 3.96%. The average interest rate for a 15-year, FRM rose to 3.50%, up from 3.47%.
In addition, the contract interest rate for 5/1 ARMs is up to 3% from 2.90% last week.