By Richard Leong
NEW YORK (Reuters) - U.S. mortgage applications recorded their biggest weekly drop in over four months as home borrowing costs posted their first broad increase in six weeks, the Mortgage Bankers Association said on Wednesday.
Mortgage rates rose last week prompted by volatility in the Treasuries markets as investors fretted over the trade conflict between China and the United States and its impact on an already softening global economy.
This uncertain outlook will likely curb interest in home buying and potential borrowers from seeking a mortgage.
"Uncertainty over the near-term economic outlook and low supply continue to be the predominant headwinds for prospective homebuyers,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a statement.
The Washington-based industry group's seasonally adjusted index on loan requests to buy a home and to refinance one fell 6.2% to 576.2 in the week ended Aug. 23. This was the steepest decline since a 7.3% fall in the week of April 19.
The average interest rate for 30-year fixed-rate mortgages, with conforming loan balances of $484,350 or less, climbed to 3.94% from prior week's 3.90%, which was the lowest since November 2016.
The 30-year rate on conforming mortgages has fallen 44 basis points so far this year.
Average interest rates on most fixed-rate home loans MBA tracks edged up 1 basis point from the prior week, while the average rate on five-year adjustable mortgages jumped to 3.42% from 3.35% the prior week.
As borrowing costs turned higher, refinancing activity fell 7.6% last week, while loan applications to buy a home declined by 4%.
The refinancing share of total applications shrank to 62.4% from 62.7% the week before.