As mortgage rates continued to climb, mortgage applications took their biggest hit since mid-April. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of application volume, decreased 6.0 percent on both a seasonally adjusted and unadjusted basis compared to the previous week. The Refinance Index dropped by 7.0 percent and was 11 percent lower than the same week one year ago. The refinance share of mortgage activity decreased to 31.7 percent of total applications from 31.9 percent the previous week. [refiappschart] There was also a 6.0 percent decrease in the seasonally adjusted and unadjusted Purchase indices. This drove the unadjusted index to a level 22 percent lower than the same week one year ago. [purchaseappschart] “Mortgage rates continued to move higher last week as markets digested the recent upswing in Treasury yields. Rates for all mortgage products increased, with the 30-year fixed mortgage rate increasing for the fourth consecutive week, up to and above 7.53 percent – the highest rate since 2000,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “As a result, mortgage applications ground to a halt, dropping to the lowest level since 1996. The purchase market slowed to the lowest level of activity since 1995, as the rapid rise in rates pushed an increasing number of potential homebuyers out of the market. ARM loan applications picked up over the week and the ARM share increased to 8 percent, as some borrowers searched for ways to lower their payments.”
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