Mortgage Applications Decline After Rates Jumped to a 1-Year High

Mortgage applications declined last week, after the Federal Reserve issued a split decision on interest rates, according to the Mortgage Bankers Association.For the week ending on July 31, MBA's Market Composite Index—a measure of total mortgage loan application volume—dropped 2.9% on a seasonally adjusted basis from one week earlier.The Purchase Index, deemed a leading indicator for home sales, dipped 4% week over week on a seasonally adjusted basis, and was also down 4% from a year earlier. Refinance activity dipped 2% on the week and was down 9% annually.The downturn came after three members of the Federal Open Market Committee called for an interest rate hike at last week's vote. Although the majority opted to hold rates steady, the growing chorus of concern over inflation rippled through bond markets.“In the wake of the July FOMC meeting, longer-term rates increased, with mortgage rates reaching their highest level in more than a year,” said Mike Fratantoni, MBA’s Chief Economist. “Application volume for both refinance and purchase loans declined for the week, and are now running behind last year’s pace, indicating that higher mortgage rates have weakened overall demand.”MBA e...