Mortgage Applications Drop on Lower Demand for Refinancing

Applications for mortgages dropped last week, as demand for refinancing loans fell.

The Market Composite Index, which measures total applications for mortgage loans, slipped 14.4% from a week earlier, on a seasonally adjusted basis. The figure does not include an adjustment for Veterans Day.

The Refinance Index fell 16.5% and is now at its lowest level since July. The seasonally adjusted Purchase Index fell 5%, the first decrease after three weeks of increases. Refinancing applications accounted for more than 80% of total applications.

"Rates increased sharply last week due to stronger economic data and lingering uncertainty regarding the structure and impact of the Fed's QE2 program. Mortgage applications, particularly for refinances, dropped in response," said Michael Fratantoni, vice president of the Mortgage Bankers Association.

The average contract interest rate for 30-year fixed-rate mortgages rose to 4.46% from 4.28%, the highest since September. The average contract interest rate for a 15-year fixed-rate mortgage rose to 3.87% from 3.64%.