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Mortgage apps drop amid rising rates

February 14, 2011 - Buyers relocating to a new home were given pause as climbing mortgage rates made home loans more expensive.

As a result, The Mortgage Bankers Association reported total mortgage activity fell during the week ending February 4. Total mortgage volume decreased 5.5 percent, driven down primarily by a reduction in the number of current homeowners applying for a refinance - that measure dropped 7.7 percent. Meanwhile, purchase applications dropped by just 1.4 percent, showing lower rates didn't necessarily put off many people's moving plans.

At the same time, MBA vice president of research and economics Michael Fratantoni said purchase volume remains low ahead of the spring buying season.

"Mortgage rates increased last week as many incoming economic indicators continue to show stronger growth than had been anticipated. Refinance volume continues to be low, as fewer homeowners with equity have any incentive to refinance," said Fratantoni. "We are at the beginning of the spring buying season, but purchase volume remains weak on a seasonally adjusted basis."

A report from Freddie Mac showed mortgage rates climbed back above 5 percent last week and are now closer to year-ago levels, which could make it more expensive for some families to consider buying a new home.
 

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