Mortgage applications drop as rates rise

The Mortgage Bankers Association says mortgage applications dropped off significantly last week as mortgage rates begin rising once again.

Overall, the group says applications dropped a seasonally adjusted 7.5 percent during the week ending March 25, as interest in both refinancing and purchase applications dropped. Refis fell 10.1 percent from the previous week, while purchase applications dropped 1.7 percent.

Analysts attributed the reduced numbers to rising interest rates. The report said the average rate for a 30-year fixed-rate loan during the week jumped from 4.8 to 4.92 percent, while the 15-year rate experienced a similar increase.

"Treasury and mortgage rates increased towards the end of last week, as global markets calmed following the recent crises in Japan and the Middle East," said Michael Fratantoni, MBA's vice president of research and economics. "As rates climb back to 5 percent, fewer homeowners have both the incentive and the ability to refinance"

The mortgage numbers also hint at the potential for a slow start for the usual spring homebuying season. However, pointing in the other direction, the National Association of Realtors' recent Pending Home Sales Index increased last month.

Courtesy of 2M Realty News