US mortgage applications post biggest fall in four months

New York

US MORTGAGE applications to buy a home and to refinance one recorded their steepest weekly decline in four months as some mortgage rates increased to one-month highs, in step with higher bond yields, the Mortgage Bankers Association (MBA) said on Wednesday.

The Washington-based industry group said its seasonally adjusted index on home loan requests to lenders fell by 7.3 per cent to 425.6 in the week ended April 19. The drop was the biggest since a 9.9 per cent decrease in the week of Dec 21 last year.

"The strong economy and job market (are) keeping buyer interest high, but rising mortgage rates could add pressure to the budgets of some would-be buyers," MBA's chief economist Mike Fratantoni said in a statement.

Interest rates on conforming 30-year mortgages, with loan balances of US$484,350 or less, averaged 4.46 per cent last week, marking a one-month peak and edging up from 4.44 per cent a week earlier, MBA said.

Other mortgage rates MBA tracks on average increased from two basis points to six basis points.

Mortgage rates rose in tandem with Treasury yields last week as investors scaled back their safe-haven bond holdings amid encouraging economic data in China and the United States.

"Borrowers remain extremely sensitive to rate changes, which is why there has been a 28 per cent drop in refinance applications over this three-week period," Mr Fratantoni said. "Purchase activity also declined, but remains almost 3 per cent higher than a year ago."

MBA's seasonally adjusted gauge on refinancing applications fell 11 per cent to 1,293 last week. Four weeks earlier, it climbed to 1,786, its strongest since November 2016 when mortgage rates fell to their lowest levels in over 14 months.

The share of refinancing requests versus total applications contracted to 39.4 per cent from 41.5 per cent in the prior week.

The group's index on purchase mortgage activity, which is seen as a proxy for future housing activity, retreated from a near nine-year high last week. REUTERS