US mortgage applications fall as rates climb to 1-month high

By Ovunc Kutlu

ISTANBUL (AA) - US mortgage applications decreased last week, as rates climbed to their highest level in a month, according to a Mortgage Bankers Association (MBA) report released Wednesday.

The market composite index, a measure of mortgage loan application volume, declined 5.2% on a seasonally adjusted basis for the week ending May 31. On an unadjusted basis, the index plummeted 16% compared to the previous week.

"After adjusting for the Memorial Day holiday, both purchase and refinance application volumes were down, with purchase activity specifically 13 percent below last year’s level," Mike Fratantoni, MBA’s chief economist, said in a statement.

"Government purchase volume was down less, helped by growth in VA applications. The market is relying on first-time homebuyer demand, and many first-time buyers do use government lending programs," he added.

The average contract interest rate for 30-year fixed-rate mortgages rose to 7.07%, its highest level since early May, from 7.05% the previous week.

The rate for 15-year fixed-rate mortgages, meanwhile, increased to 6.75% from 6.66% during that period.

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