US mortgage rates tick up to 6.37%, MBA says

By Ann Saphir and ‌Saeed Azhar

April ​29 (Reuters) - ​U.S. mortgage rates rose last week for the first time in a month, with the average 30-year ‌fixed-rate mortgage up 2 basis points to 6.37% for ⁠the week ended April 24, the Mortgage Bankers Association said on Wednesday.

Mortgage ‌applications dropped 1.6% from a ‌week earlier, driven by a 4% decline in refinancing, the MBA said.

Still, purchase applications increased 2%, a sign that potential ​homebuyers are "moving forward this spring and taking advantage of the more favorable inventory conditions in most parts of the ⁠country," MBA Chief Economist Mike Fratantoni said.

Springtime is traditionally peak homebuying season. Though borrowing ​costs are down from their 6.57% peak immediately after the February start of the U.S.-Israeli war with ​Iran, they are still more than ‌a quarter of a percentage point higher than they had been before the hostilities drove up ⁠the price of oil and yields on the Treasury bonds lenders use to set home loan rates.

Lenders are cautious. "We're just seeing a modest ⁠increase (in mortgage demand) from March to April, where we normally see a broader ​and larger increase historically," Matt Vernon, head of consumer lending at Bank of America, said. "And I think that's just this timing speed bump that ‌we're all trying to get our heads around."

The Federal Reserve is expected to leave its target ‌for short-term borrowing costs in the 3.50% to 3.75% range ⁠at its meeting Wednesday, and ‌financial markets are ​betting the policy rate will stay there until deep into next year.

(Reporting by Ann Saphir; Editing by Lisa ‌Shumaker)

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