US home-refinance applications slipped last week to a three-month low as mortgage rates neared 7%.
The Mortgage Bankers Association's measure of refinancing dropped 7.1% to 634.1 in the week ended May 23. The contract rate on a 30-year mortgage climbed 6 basis points to 6.98%, according to the data released Wednesday. The rate on five-year adjustable mortgage rose to the highest since January.
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While the group's index of applications for home purchases increased 2.7% last week, demand has cooled since early April when financing costs reached an almost six-month low. Persistent affordability challenges are sidelining many prospective buyers and also encouraging builders to lure house hunters.
At the same time, inventory is rising in many areas and starting to help slow the growth of home prices.
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Mortgage rates follow moves in Treasury yields, which have climbed since early April. A week ago, the yield on the 10-year note reached the highest level since February on concerns the tax bill moving through Congress will cause the nation's deficit to swell.
The MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks and thrifts. The data cover more than 75% of all retail residential mortgage applications in the US.
