Daniel Acker | Bloomberg | Getty Images
A 'For Sale' sign stands in a vacant lot near
new homes in Dunlap, Illinois.
The drop was expected, given how quickly mortgage
interest rates rose. The average contract interest
rate for 30-year fixed-rate mortgages with
conforming loan balances ($417,000 or less)
increased to 3.95 percent, from 3.77 percent, with
points increasing to 0.39 from 0.38 (including the
origination fee) for 80 percent loan-to-value ratio
loans.
"Following the election, mortgage rates saw their
biggest week-over-week increase since the taper
tantrum in June 2013, and reached their highest
level since January of this year," said David
Stevens, president and CEO of the Mortgage Bankers
Association. "Investor expectations of faster growth
and higher inflation are driving the jump up in
rates, and rates have now increased for five of the
past six weeks, spurring a commensurate drop in
refinance activity."
Rate-sensitive refinances fell another 11 percent
last week from the previous week, seasonally
adjusted, to the lowest level since March. Refinance
volume is still 19 percent higher than the same week
one year ago, when rates were slightly higher.
"It is no surprise that refinance volume has
fallen, as the long boom has meant that there are
fewer borrowers with any incentive to refi," said
Stevens. "We continue to expect strong growth in
home sales and purchase volume over the next few
years, given our expectations of a strong job market
and favorable demographics. The decline this week
likely just reflects potential buyers waiting to see
whether rates will stay at these higher levels."