Total mortgage application volume fell 1.6 percent on a seasonally adjusted basis from one week earlier, for the week ending May 22, according to the Mortgage Bankers Association (MBA). While volume is still higher than a year ago, it has fallen 10 percent in the last four weeks.
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“Mortgage rates continued to climb last week due to stronger home sales, rising inflation, and further signals that the Fed is likely to raise their target rate this year. Refinance volume dropped to its lowest level since January,” said Michael Fratantoni, chief economist for the MBA.
After sitting unchanged for two weeks, purchase activity picked up very slightly, led by low or no down payment Veterans Administration (VA) loans. Purchase volume rose one percent week to week and is now 14 percent higher than the same week one year ago. VA loans made up 12 percent of total application volume, indicating that the least expensive loans are becoming a growing share.
Mortgage rates have not moved much in the past few days but have been plenty volatile in the past few weeks. Increasing talk of higher rates in the second half of this year has some analysts suggesting that buyers who need to borrow had better do it now. While rates have surprised to the downside in the past year, this particular rise appears to be more stubborn.
“Rates have made several attempts to move lower after spiking in early May, but each time they’ve quickly run out momentum,” noted Matthew Graham of Mortgage News Daily. “Underlying market conditions are once again signaling a bounce attempt is underway, but it’s not safe to plan on the good times continuing until/unless we see several days in the near future with even stronger improvements.”