By Evan Sully
(Reuters) - Mortgage applications declined last week, especially for refinancing, as mortgage rates rose back over 3% for the first time in about a month.
The Mortgage Bankers Association (MBA) said on Wednesday its average contract interest rate for traditional 30-year mortgages inched up to 3.06% from 2.99% in the week ending Aug. 13. The seasonally adjusted market index tracking mortgage applications fell 3.9% from a week earlier, reflecting a 5.3% decrease in applications to refinance existing loans.
After hitting record lows late last year below 2.9%, mortgage rates climbed in the first part of this year and peaked in the spring. Rates had been drifting lower since, held down in large part by the U.S. Federal Reserve's extraordinary stimulus measures aimed at helping the economy rebound from the coronavirus pandemic, but ticked higher last week after data showed a hiring surge last month.
"Mortgage rates followed an overall increase in Treasury yields last week, which started higher from the strong July jobs report before slowing because of weaker consumer sentiment and concerns about rising COVID-19 cases," said Joel Kan, MBA’s associate vice president of economic and industry forecasting. "The eligible pool of homeowners who stand to benefit from a refinance is smaller now."
Purchase applications declined 0.8%, the MBA said.