“As incoming economic data reassured investors regarding U.S. growth, and financial markets returned to viewing a December Fed hike as increasingly likely, mortgage rates rose to their highest level in a month last week,” said Michael Fratantoni, chief economist at the MBA. “Total and refinance application volume dropped to their lowest levels since June as a result.”
Applications to refinance a home loan, which are highly rate-sensitive, have been falling for weeks, and took another 8 percent dive last week, seasonally adjusted. Mortgage applications to purchase a home fell a smaller 3 percent for the week and are 27 percent higher than one year ago. Comparisons to last year may be skewed, however, as new mortgage rules went into effect last October that pulled demand forward and then delayed mortgage processing.
The Federal Housing Administration share of total applications increased to 10.9 percent from 10.0 percent the week before, which may indicate more first-time buyers entering the market. FHA loans require just 3.5 percent down payments. First-time buyers are traditionally more active in the fall, as they are less likely to be large families, influenced by school calendars.