US mortgage rates increased to the highest level in five months, pushing down home-purchase applications for the fifth time in the last six weeks.
The contract rate on a 30-year fixed mortgage increased 11 basis points in the week ended April 19 to 7.24%, the highest since Nov. 24, according to Mortgage Bankers Association data released Wednesday. The index of mortgage applications for home purchases fell 1%.
The overall index of applications, which includes those for home purchases and refinancing, declined 2.7% last week. Refinancing dropped 5.6%, the largest decrease since February.
Borrowing costs above 7% have opened a chasm between the resale market and new-home market. Sales of previously-owned houses are struggling to gain momentum as potential buyers wait for interest rates to drop. That has limited listings and pushed up prices.
Homebuilders have in turn benefited from the lean resale inventory, with some firms driving sales by offering cheaper financing and incentives. New-home sales rebounded strongly last month to their fastest pace since September.
The MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks and thrifts. The data cover more than 75% of all retail residential mortgage applications in the US.