Demand for home loans waned in the US last week as mortgage rates rose to their highest levels in over a year. According to a report from the Mortgage Bankers Association, the rising rates impacted demand for both purchase and refinance loans, prompting a slight slowdown across the mortgage industry. Interest rates had been hovering around historical lows for more than a year, but they have been surging over the last six weeks. Last week, the average rate for a 30-year fixed mortgage was 4.17 percent, marking its highest level since March 2012. As a result, the MBA’s gauge of applications for refinance loans slipped 3.4 percent while the group’s measure of home purchase applications fell 3 percent. The percentage of total applications accounted for by refinance requests, meanwhile, held steady at 69 percent.
According to most economists, the primary reason interest rates have been climbing in recent weeks is that banks are concerned that the Federal Reserve is getting close to winding down its monetary stimulus plan. These concerns have caused the average rate for a 30 year loan to rise 0.58 percent since the start of May. This steady increase in mortgage rates has taken a toll on mortgage demand, sparking a 3.3 percent slide in the MBA’s index for overall mortgage application demand. While the MBA’s index does not represent all of the mortgages applied for across the US, the group does report on about three-fourths of all residential mortgage applications across the nation.