A rise in interest rates has put a dent in consumers' desire for mortgage applications, but interest in home purchasing remains high as the spring selling season approaches.
Applications for mortgages decreased 1.3% in the past week as mortgage rates hit the highest point since last July, according to the latest survey from the Mortgage Bankers Association.
“The 30-year fixed mortgage rate climbed to 3.26% last week, which is the highest since last July and up 40 basis points since the start of 2021," said Joel Kan, MBA’s associate vice president of economic and industry forecasting. "Signs of faster economic growth, an improving job market and increased vaccine distribution are pushing rates higher.”
The Refinance Index decreased 5% from the previous week and was 43% lower than the same week one year ago.
However, the interest in buying a home jumped in the past week. The seasonally adjusted purchasing index increased 7% from the prior week
“With the spring buying season at the doorstep, the purchase market had its strongest showing in four weeks, with gains in both conventional and government applications," added Kan. "Overall activity was 2.4 percent higher than a year ago, and loan sizes moderated for the second straight week – potentially a sign that more first-time buyers are entering the market.”
The survey covers over 75% of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990.