Thirty-year fixed mortgage rates are at their highest level in over a month, and home buyers are starting to retreat a bit.
Mortgage applications fell 7.3% last week, according to the Mortgage Bankers Association (MBA).
Applications to buy a home slipped 4% from the previous week based on seasonally adjusted figures but remain 3% higher than a year ago.
“Borrowers remain extremely sensitive to rate changes.” MBA Chief EconomistMike Fratantoni said. “The strong economy and job market is keeping buyer interest high, but rising mortgage rates could add pressure to the budgets of some would-be buyers.”
Applications to refinance a home loan, which are especially sensitive to interest rates, declined 11%. As the 30-year fixed mortgage rate climbed from 4.36% to 4.46% over a three-week period, refinance applications have tumbled 28%.
The average contract interest rate for 30-year fixed-rate mortgages, with conforming loan balances of $484,350 or less, increased to 4.46% from 4.44% last week. The rate for a jumbo 30-year mortgage rose to 4.35% from 4.33%. The average rate for 15-year fixed-rate mortgages increased to 3.87% from 3.84%, MBA said.
Long-term interest rates tend to drift higher when the economy improves as investors demand returns that keep pace with inflation.
“Borrowing costs have recently drifted higher because of ebbing geopolitical concerns, as well as signs of strengthening in the U.S. economy, including the recent data pointing to robust retail sales.” Fratantoni added.
This article originally appeared on USA TODAY: Mortgage applications fall as higher rates chill buyers