U.S. mortgage applications hit four-year low as rates rise

By Richard Leong

NEW YORK (Reuters) - U.S. borrowers filed the fewest applications to buy a home and to refinance one in nearly four years last week as some 30-year mortgage rates increased to their highest levels in about 8-1/2 years, the Mortgage Bankers Association said on Wednesday.

The Washington-based industry group's seasonally adjusted gauge on mortgage requests, which is seen as a proxy on future housing activity, fell 4.0 percent to 316.2 in the week ended Nov. 2. This was the weakest reading since December 2014.

Home borrowing costs rose last week in step with higher bond yields due to upbeat payrolls data last month which showed wages recording their largest annual gain in 9-1/2 years.

"Rates increased slightly last week, as various job market indicators showed a bounce back in job gains and an acceleration in wage growth in October," said Joel Kan, MBA’s associate vice president of economic and industry forecasts, in a statement.

GRAPHIC: U.S. mortgages activity interactive - https://tmsnrt.rs/2PeEslD

Interest rates on 30-year conforming mortgages, whose balances are $453,100 or less, on average rose to 5.15 percent, the highest since April 2010. Last week, they averaged 5.11 percent.

Other 30-year mortgage rates were up 3 basis points to 7 basis points last week.

Rising rates, together with tight housing inventories, have hurt loan demand to buy a home.

"It’s evident that housing inventory shortages continue to impact prospective homebuyers this fall,” Kan said.

MBA's seasonally adjusted gauge on purchase mortgages fell 5 percent to 213.6, the lowest in two years.

The group's seasonally adjusted measure on mortgage refinancing activity decreased 2.5 percent last week to 861.8. It held above a near 18-year low of 838.1 reached a month ago.

The share of refinancing as a part of total applications shrank to 39.1 percent from 39.4 percent the week before.

(Reporting by Richard Leong; Editing by Chizu Nomiyama and Susan Thomas)

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