Mortgage Applications Fall as Loan Costs Rise

U.S. mortgage applications to buy a home and to refinance one declined for the first time in three weeks, as home borrowing costs rose in step with higher U.S. bond yields, the Mortgage Bankers Association said on Wednesday.

The Washington-based industry group said its seasonally adjusted index on mortgage activity fell 2.5 percent to 375.3 in the week ended March 1.

"Slightly higher mortgages rates last week led to a decrease in application volume. Furthermore, the average loan size for purchase applications increased to a record high, led by a rise in the average size of conventional loans. This suggests that move-up and higher-end buyers have so far become a greater share of the spring market," said Mike Fratantoni, MBA Senior Vice President and Chief Economist.

"Overall, conventional purchase loans are up 2.1 percent relative to last year, indicating that homebuyers continue to be inspired by the stable rate environment and the modest increase in housing supply."

The refinance share of mortgage activity decreased to 40.0 percent of total applications from 40.4 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 7.4 percent of total applications.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) increased to 4.67 percent from 4.65 percent.

The average contract interest rate for 15-year fixed-rate mortgages increased to 4.08 percent from 4.00 percent.