U.S. mortgage applications fell from their highest level in 2-1/2 years as refinancing activity pulled back in step with an increase in home borrowing costs, the Mortgage Bankers Association said on Wednesday.

The Washington-based group’s seasonally adjusted index on requests for loans to buy a home and refinance a mortgage declined by 5.6% to 475.6 in the week ended April 5. The previous week’s reading was the strongest since the week of Oct. 14, 2016.

Interest rates on 30-year “conforming” mortgages, or home loans with balances of $484,350 or less, averaged 4.40%, up from the prior week’s 4.36% which was the lowest since the week of Jan. 19, 2018.

"Mortgage rates inched back up last week, but remain substantially lower than they were in the second half of last year," said Mike Fratantoni, MBA Senior Vice President and Chief Economist.

"As quickly as refinance activity increased in recent weeks, it backed down again in response to the rise in rates. However, this spring's lower borrowing costs, coupled with the strong job market, continue to push purchase application volume much higher. Purchase applications are now up more than 13 percent compared to last year at this time."