Higher Rates Dampen Demand for Mortgages

Washington, DC, March 30, 2011 -- Mortgage application volume fell last week as higher interest rates dampened demand for refinancing, according to the Mortgage Bankers Association.

MBA said its index of mortgage application activity, which includes both refinancing and home purchase demand, fell 7.5% in the week ended March 25.

"As rates climb back to 5%, fewer homeowners have both the incentive and the ability to refinance," Michael Fratantoni, MBA's vice president of research and economics, said in a press release.

"Purchase volume remained roughly flat as we enter what is typically the peak homebuying season."

Refinancing applications dropped 10.1%, while purchase applications fell 1.7%.

Fixed 30-year mortgage rates averaged 4.92% in the week, up from 4.80% the week before.