NEW YORK (Reuters) - U.S. mortgage applications to buy homes fell to their lowest level last week since February as interest rates on 30-year home loans edged up from the previous week’s 16-month trough, an industry group said on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of loan requests for home purchases, a leading indicator of home sales, fell 5.0 percent in the week ended Oct. 24 to its lowest level since February. It was 15 percent lower than the same week a year earlier.
Fixed 30-year mortgage rates averaged 4.13 percent in the week, up 3 basis points from 4.10 percent the week before.
The Washington-based group’s seasonally adjusted index of refinancing applications fell 7.4 percent, led by a steep drop in requests for jumbo loans.
Jumbo loans are those whose size is above $417,000, which is the limit on what federal mortgage agencies Fannie Mae and Freddie Mac can purchase.
“Borrowers with jumbo loans tend to be most sensitive to changes in rates, and that sensitivity has been clearly apparent in the past few weeks with double and even triple digit percentage changes in refinance application volume for jumbo loans,” MBA’s chief economist Mike Fratantoni said in a statement.
The average loan size for refinance applications fell to $263,600 in the latest from a survey high of $306,400 the prior week. The drop was fueled by a 41 percent drop in refinance applications for loans greater than $729,000, which had surged nearly 130 percent a week earlier, according to Fratantoni.
MBA’s weekly mortgage application activity, which includes both refinancing and home purchase demand, fell 6.6 percent in the latest week.
The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.
Reporting by Luciana Lopez and Richard Leong; Editing by Leslie Adler and Meredith Mazzilli