Mortgage applications drop as loan rates rise

The housing market got a boost in the spring of 2010 from a federal homebuyers tax credit that ended in April and was followed by a drop in purchases last summer. 

“Stronger economic data toward the end of the week, coupled with the end of the Fed’s second round of quantitative easing, helped bring mortgage rates to their highest level in over a month,” said Michael Fratantoni, MBA’s vice president of research and economics.

“Refinance activity, already constrained by a smaller pool of eligible borrowers, declined in response to the higher rates, but purchase applications picked up appreciably in the week before the July 4 holiday.”

The average contract interest rate for 30-year fixed-rate mortgages increased to 4.69 percent from 4.46 percent, the highest rate since the middle of May.

The average rate for 15-year fixed-rate mortgages increased to 3.79 percent from 3.64, the highest rate since the beginning of May.

The four-week moving average, a less volatile measure of the market, is down 0.5 percent. The four-week moving average is up 0.8 percent for the seasonally adjusted purchase index, while this average is down 1.1 percent for the refinancing.

The refinance share of mortgage activity decreased to 66.4 percent of total applications from 69.5 percent the previous week.