Mortgage applications in the US fell last week as a key rate ticked higher, while refinancing and home purchase demand dropped, the Mortgage Bankers Association said Wednesday.
The market composite index, which measures loan application volume, decreased 2.2% in the week through July 3. On an unadjusted basis, the index slid 12%. The latest results include an adjustment for the Fourth of July holiday, according to the MBA.
"After adjusting for the Independence Day holiday, government purchase volume increased modestly, led by a 5% gain in (Veterans Affairs) purchase applications, while conventional purchase activity declined," said Mike Fratantoni, the MBA's chief economist.
The average fixed rate for 30-year mortgages with conforming loan balances of $832,750 or less increased to 6.58% from 6.57%. For loan balances higher than that amount, the rate decreased to 6.50% from 6.52%. For 15-year loans, the rate fell to 5.99% from 6%.
The refinance index fell 4% from the previous week, while the seasonally adjusted purchase index declined 1%, the report showed.
"Refinance application volume was down 4%, as homeowners saw little enticement to act with rates still elevated," Fratantoni said.
Fixed-rate mortgages with 30-year terms backed by the Federal Housing Administration rose to 6.28% from 6.27%. The share of FHA loans, which are often used by first-time home buyers and can involve smaller down payments, edged down to 16.4% of total applications from 16.9% the previous week, according to the MBA.
Last week, Redfin.com said US housing payments in June rose for the first time in eight months as home prices hit a record high and mortgage rates remained elevated.
