Overall mortgage applications tumbled for the third consecutive week last week as rates rose to their highest level of the year. However, an indicator for future home sales is staying resilient against rising rates.
Loan demand for purchase applications, viewed as a leading indicator of home sales, rose 2.4 percent for the week ending Aug. 23, according to the Mortgage Banker Association’s weekly index, accounting for 75 percent of the residential mortgage market.
The MBA’s overall index, which includes refinancing and purchasing demand, dropped 2.5 percent last week. That follows a 4.6 percent decrease the prior week. The drop has mostly been attributed to a fall in refinancing demand. The refinance index dropped 5.4 percent last week.
The 30-year fixed-rate mortgage rose 12 basis points last week, averaging 4.80 percent — the highest average of the year, according to the MBA. Since late May, borrowing costs have climbed by more than a percentage point.
Source: “Mortgage Applications Fall as Rates Hit 2013 High: MBA,” Reuters (Aug. 28, 2013)