Highest rates in five years prompt pullback

Would-be home buyers and refinancing homeowners both receded from the mortgage market last week as mortgage rates surged to their highest averages in nearly five years. The Mortgage Bankers Association’s seasonally adjusted index showed that total application volume, which includes home purchases and refinances, dropped 2.5 percent last week and are now 3.3 percent lower than a year ago.  

Refinance volume took most of the hit, dropping 4 percent last week compared to the previous week. Refinance volume is now 15 percent below a year ago. Borrowers who wish to refinance tend to be more rate-sensitive than home shoppers. 

Applications to buy a home still dropped 2 percent last week. Purchase applications, however, remain 5 percent higher than a year ago. 

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