The seasonally adjusted number of applications for new home loans slipped in the week ending April 8, marking the third consecutive period of drops since mortgage rates began to spike again, according to the latest statistics from the Mortgage Bankers Association. This dip was led largely by a 7.7 percent drop in the number of refinances sought by current homeowners, which fell to its lowest level since February 11.
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In addition, the number of applications for new purchases dipped 4.7 percent on a seasonally adjusted basis, the report said. However, the unadjusted level was 11.4 percent lower than it was in the same week last year.
As a consequence of the declines, the refinance share of the total mortgage market fell to 60.3 percent, the report said. That was the lowest share observed since the week ending May 7, 2010.
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The declines were largely the result of mortgage interest rates increasing for the fourth week in a row to 4.98 percent on a 30-year fixed rate loan, the report said. That was up five basis points from the prior week.
When mortgage rates rise, refinances suffer most severely because homeowners believe they will not save enough on their monthly payments under the terms of the new deal to make the cost of seeking such an option worthwhile.