Mortgage applications decrease on drop in refinancings

Mortgage applications fell last week as homeowners pulled back on refinancing.

Applications dropped 4.8 percent for the week that ended Oct. 26, as refinancing decreased 6 percent to the lowest level since August, the Mortgage Bankers Association (MBA) reported on Wednesday. 

Meanwhile, home purchases were up 1 percent and are 6 percent higher than the same week last year. 

The housing market has been showing gradual improvement in recent months and low mortgage rates are helping spur activity, although credit is still tight for potential buyers. 

The refinance share of mortgage activity decreased to 80 percent of total applications from 81 percent the previous week. 

The average contract interest rate for 30-year fixed-rate mortgages with balances of $417,500 or less increased to 3.65 percent from 3.63 percent, the highest level since mid-September.

The 30-year rate on loans with balances greater than $417,500 increased to 3.94 percent from 3.85 percent, also the highest rate since last month.

The average rate for 30-year fixed-rate mortgages backed by the Federal Housing Administration (FHA) was unchanged at 3.41 percent, the highest level since the end of September.

The average contract interest rate for 15-year fixed mortgages decreased to 2.95 percent from 2.96, while the rate for 5/1 adjustable rate loans decreased to 2.66 percent from 2.72.

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