By Evan Sully
(Reuters) - The number of applications for home mortgages decreased last week to the lowest level since mid-July, dampened by declines in refinancing activity and purchase applications as mortgage rates remained unchanged.
The Mortgage Bankers Association (MBA) said on Wednesday its seasonally adjusted market composite index tracking mortgage applications fell 1.9% from a week earlier, reflecting a 2.8% decline in applications to refinance existing loans in the week ending Sept. 3.
The average contract interest rate for traditional 30-year mortgages was unchanged at 3.03%. Purchase applications fell 0.2%, the MBA said.
After hitting record lows below 2.9% at the end of last year, 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.
"Refinance volume has been moderating, while purchase volume continues to be lower than expected given the lack of homes on the market," said Mike Fratantoni, MBA's senior vice president and chief economist.
"Economic data has sent mixed signals, with slower job growth but a further drop in the unemployment rate in August. We expect that further improvements will lead to a tapering of Fed MBS purchases by the end of the year, which should put some upward pressure on mortgage rates."