MBA said refinance activity fell 5% from a week ago and has decreased 64.2% since the first week of May, which was its most recent peak.
Overall, the refinance share of mortgage activity now represents 60% of total applications, down from 61% the prior week. This figure, MBA noted, would be the lowest share observed since April 2011.
Meanwhile, the seasonally adjusted purchase index increased 2% on a weekly basis. On an unadjusted basis, purchase activity was 6% higher compared to the same week a year ago.
Market observers are closely monitoring how rising interest rates will impact the housing industry.
“Last week’s report which showed a 13.4% decline in new home sales for July is our first indication that higher mortgage rates are having an effect on the housing market,” said Keith Gumbinger, vice president of HSH.com. “If housing is slowing, the Federal Reserve’s expected process of ‘tapering’ QE may become a more protracted process, or begin later than mid-September.”
HSH.com’s weekly mortgage radar showed a smaller uptick in rates through the week ending Tuesday, with the average rate for conforming 30-year fixed-rate mortgages rising by five basis points to 4.66%.
MBA’s latest application survey revealed the average contract rate for the 30-year conforming FRM ($417,000 or less) increased by 12 basis points to 4.80%, the highest rate since April 2011. Also, the 30-year fixed rate mortgage for Federal Housing Administration-insured loans rose to 4.52% from 4.40% a week earlier.
However, Zillow’s Mortgage Marketplace rate tracker revealed a 12 basis point decline to 4.40% as of Tuesday afternoon from last week’s 4.52% for 30-year fixed-rate mortgages.