It was a menacing mix for mortgages last week. Back-to-back major hurricanes, a holiday weekend and higher interest rates combined to bring a 9.7 percent drop in total mortgage application volume last week from the previous week.
The Mortgage Bankers Association’s seasonally adjusted weekly read was also 21.5 percent lower than the same week one year ago.
Applications to refinance a home loan and purchase a home fell sharply, with those applying to purchase falling 11 percent for the week. They were barely 1.9 percent higher from the same week a year ago. This is the lowest annual growth rate since April.
Refinance applications fell 9 percent for the week and are down 35 percent from a year ago, when rates were lower.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $424,100 or less increased to 4.04 percent from 4.03 percent, with points remaining unchanged at 0.40, including the origination fee, for 80 percent loan-to-value ratio loans.
“Applications decreased as Treasury yields rose 11 basis points over the week with news of higher than expected inflation and some market relief regarding the effect of the two major hurricanes in Texas and Florida,” said MBA economist Joel Kan. “Florida had a 22 percent decrease in overall mortgage application activity over the week. Texas rebounded from Harvey’s impact, showing a 27 percent increase in applications last week.”
Mortgage rates are now at the highest level in a month.
“Two weeks ago, the order of the day had been to push rates lower heading into Hurricane Irma weekend,” wrote Matthew Graham, chief operating officer of Mortgage News Daily. “There’s been a correction in play since then.”
All eyes will be on the Federal Reserve later Wednesday, and there is a potential for rates to move in either direction. While a rate hike is not expected, traders will be listening for Fed Chair Janet Yellen to offer future clues in her press conference.