According to the Mortgage Bankers Association (MBA), mortgage applications fell 4% last week after plummeting 11.7% the week before. The Market Composite Index, a measure of mortgage loan application volume, decreased 4.0% on a seasonally adjusted basis from one week earlier. Mortgage applications are now about a third below their level from a year ago.
The decline in mortgage activity is fueled by the rise in interest rates which have reached their highest level since July 2011. The average rate for the 30-year fixed rate-mortgage increased to 4.68% from 4.58% last week. The spike in rates has driven the refinance share of mortgage applications down to 64%.
Mike Fratantoni, MBA's vice president of research and economics, said last week that refinancing applications reached their lowest level in two years. The rate remains unchanged.
According to economists at Contingent Macro Advisors, mortgage activity has fallen 43.6% over the past two months.
"Mortgage applications had been on a rising trend over the past 18 months although there has been substantial week-to-week volatility, but the trend now appears to have topped out and begun a steady retreat," according to a statement from Contingent Macro Advisors.
The adjustable-rate mortgage (ARM) share of activity decreased to 7% of total applications. Despite the rise in rates and declines in applications, the four-year average for home purchases continues to climb since it turned upward in November 2011.