Mortgage refinance applications continued to suffer last week as mortgage rates climbed to their highest level in a year, the ""Mortgage Bankers Association"":http://mbaa.org/ (MBA) reported in its Weekly Applications Survey.
[IMAGE]The survey's Market Composite Index, a measure of mortgage loan application volume, declined a seasonally adjusted 8.8 percent for the week ending May 24, MBA reported. Unadjusted, the index dropped 9 percent week-over-week.
[COLUMN_BREAK]The Refinance Index decreased 12 percent, the largest single-week drop in refinance volume so far this year (just beating out the previous survey's drop). The refinance share of total mortgage activity fell 3 percentage points to 71 percent, the lowest level since April 2012.
""Refinance applications fell for the third straight week bringing the refinance index to its lowest level since December 2012 as mortgage rates increased to their highest level in a year,"" said Mike Fratantoni, MBA's VP of research and economics. ""Rates rose in response to stronger economic data and an increasing chance that the Fed may soon begin to taper their asset purchases.""
Meanwhile, the seasonally adjusted Purchase Index rose 3 percent from the last survey. The unadjusted index was up 2 percent week-over-week and 14 percent year-over-year.
The average contract interest rate for a 30-year fixed-rate mortgage was 3.90, an increase of 12 basis points, according to MBA. Points were unchanged at 0.39 (including the origination fee) for 80 percent loan-to-value ratio loans.