US mortgage applications fall 3.7% with rising rates

By Ovunc Kutlu

ISTANBUL (AA) - Mortgage applications in the US fell on a weekly basis amid rising mortgage rates, according to a report Wednesday by the Mortgage Bankers Association (MBA).

The Market Composite Index, a measure of mortgage loan application volume, dropped 3.7% on a seasonally adjusted basis for the week ending May 26, compared to the previous week. On an unadjusted basis, the index fell 5%.

The 30-year fixed mortgage rate in the US climbed to 6.91% for the week ending May 26, up from 6.69% in the previous week.

"Inflation is still running too high, and recent economic data is beginning to convince investors that the Federal Reserve will not be cutting rates anytime soon," said MBA Chief Economist Mike Fratantoni.

"Application volumes for both purchase and refinance loans decreased last week due to these higher rates. While refinance demand is almost entirely driven by the level of rates, purchase volume continues to be constrained by the lack of homes on the market," he added.

The average contract interest rate for a 15-year fixed-rate mortgage also posted an increase, climbing to 6.41%, from 6.15% for the week.

The MBA survey covers more than 75% of US retail residential mortgage applications.