Rates have spiked amid growing bond market unease about the potential impact of oil prices on inflation. Expectations of a Federal Reserve interest rate hike at its next announcement, scheduled for this afternoon, have also soared.
On a seasonally adjusted basis, the MBA’s Market Composite Index – which measures all mortgage loan applications – was down by 4.1% week over week, while the unadjusted Index slid by 15%.
Joel Kan, vice president and deputy chief economist at the MBA, said the latest 30-year fixed rate marked its highest level since May of last year.
“After adjusting for the Labor Day holiday, purchase applications dipped relative to the week prior as higher mortgage rates caused many buyers to pause their purchase decisions,” he said. “The current level of rates also eliminated much of the benefit to refinance for many borrowers, resulting in declines in conventional, FHA and VA refinance applications.”
The 10-year Treasury yield, which heavily influences fixed mortgage rates, moved above 5% early on Wednesday morning before ticking lower.
