Purchase loan applications drop as mortgage rates continue to increase

As mortgage rates continued to climb, applications for purchase loans dropped a seasonally adjusted 3 percent for the week ending July 5 compared to a week earlier, but were still up 5 percent on an annual basis, according to the latest Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications survey.

Refinance applications, which have taken a big hit over the last few weeks amid a surge in mortgage rates, fell 4 percent from a week earlier, the survey found.

The drop in mortgage applications came as interest rates climbed to their highest level since July 2011, with the average rate for 30-year fixed-rate mortgages with conforming balances of $417,500 or less rising to 4.68 percent, up from 4.58 percent a week earlier, the MBA reported.

Mortgage rates have leaped over the last two months, increasing largely on indications that the Fed intends to wind down its stimulus program later this year. A recent positive jobs report probably made it less likely that the Fed would delay such plans, doing little to relieve upward pressure on rates.  Source: MBA