By Evan Sully
(Reuters) - Mortgage applications decreased last week in step with a drop in refinancing as mortgage rates remained unchanged.
The Mortgage Bankers Association (MBA) said on Wednesday its seasonally adjusted market composite index tracking mortgage applications fell 2.4% from a week earlier, reflecting a 3.8% decline in applications to refinance existing loans in the week ending Aug. 27.
The average contract interest rate for traditional 30-year mortgages was unchanged at 3.03%. Purchase applications rose 0.6%, hitting the highest level since early July, the MBA said.
After hitting record lows at the end of 2020 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 novel coronavirus pandemic.
"Despite low rates, refinance applications declined, with some borrowers still waiting for rates to drop even lower," said Joel Kan, MBA’s associate vice president of economic and industry forecasting. "Recent uncertainty around the economy and pandemic have kept rates low over the past month, which is why the refinance index has oscillated around these levels."