(Reuters) - U.S. mortgage applications recorded their steepest weekly fall since December 2016 as some home borrowing costs rose, curbing the recent pickup in loan demand for refinancing and home purchases, the Mortgage Bankers Association said on Wednesday.
The Washington-based industry group’s seasonally adjusted index on mortgage applications stood at 512.2 in the week ended Sept. 20, down 10.1% from the prior week. This was the biggest week-on-week decline since a 12.1% fall in the week of Dec. 23, 2016.
The average interest rate for 30-year fixed-rate mortgages, with conforming loan balances of $484,350 or less, edged up 1 basis point to 4.02%, the highest since the week of July 26. Two weeks earlier, it stood at 3.82%, which was the lowest since November 2016.
Interest rates on other types of home loans MBA tracks were mixed from the prior week, down 15 basis points to up 4 basis points.
“The increase in rates led to fewer refinances, and activity has now dropped 17% over the last two weeks,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a statement.
MBA’s seasonally adjusted reading on refinancing fell 15.2%, its steepest fall since December 2016 , to 1,928.0.
The refinance share of mortgage applications shrank to 54.9% of total applications from 57.9% the week before.
The group’s seasonally adjusted gauge on loan requests slipped 3.1% to 261.4, following three consecutive weeks of increases.
“The recent data on increased existing-home sales and new residential construction points to the underlying strength in the purchase market this fall,” Kan said.
On Wednesday, the Commerce Department said domestic new home sales rose 7.1% to a seasonally adjusted annual rate of 713,000 units in August. This was stronger than a 3.5% increase forecast among economists polled by Reuters.
Reporting by Richard Leong; Editing by Edmund Blair and Chizu Nomiyama