NEW YORK (Reuters) – U.S. mortgage applications to buy a home and to refinance one recorded their steepest weekly decline in four months as some mortgage rates increased to one-month highs, in step with higher bond yields, the Mortgage Bankers Association said on Wednesday.
The Washington-based industry group said its seasonally adjusted index on home loan requests to lenders fell by 7.3% to 425.6 in the week ended April 19. The drop was the biggest since a 9.9% decrease in the week of Dec. 21.
“The strong economy and job market (are) keeping buyer interest high, but rising mortgage rates could add pressure to the budgets of some would-be buyers,” MBA’s chief economist Mike Fratantoni said in a statement.
Interest rates on conforming 30-year mortgages, with loan balances of $484,350 or less, averaged 4.46% last week, marking a one-month peak and edging up from 4.44% a week earlier, MBA said.
Other mortgage rates MBA tracks on average increased from 2 basis points to 6 basis points.
Mortgage rates rose in tandem with Treasury yields last week as investors scaled back their safe-haven bond holdings amid encouraging economic data in China and the United States.
“Borrowers remain extremely sensitive to rate changes, which is why there has been a 28% drop in refinance applications over this three-week period,” Fratantoni said. “Purchase activity also declined, but remains almost 3% higher than a year ago.”
MBA’s seasonally adjusted gauge on refinancing applications fell 11.0% to 1,293 last week. Four weeks earlier, it climbed to 1,786, its strongest since November 2016 when mortgage rates fell to their lowest levels in over 14 months.
The share of refinancing requests versus total applications contracted to 39.4% from 41.5% in the prior week.
The group’s index on purchase mortgage activity, which is seen as a proxy for future housing activity, retreated from a near nine-year high last week.
The purchase index decreased for the first time in seven weeks, slipping 4.1% on a seasonally adjusted basis to 269.3.
MBA’s weekly survey, which began in 1990, covers more than 75% of all U.S. retail mortgage applications.
By Richard Leong