Applications for U.S. home mortgages dropped for a second week in a row last week as a spike in interest rates stymied demand for refinancing, data from an industry group showed on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, tumbled 9.8 percent in the week ended May 17.
The index of refinancing applications slumped 11.7 percent, while the gauge of loan requests for home purchases, a leading indicator of home sales, fell 3 percent.
Fixed 30-year mortgage rates rose 11 basis points to average 3.78 percent.
"Mortgage rates increased to their highest level since March last week, leading to the largest single week drop in refinance applications this year," said Mike Fratantoni, MBA's vice president of research and economics.
Despite the decline in purchase demand, activity was still running about 10 percent above the pace at this time a year ago, Fratantoni said.
The refinance share of total mortgage activity slipped to 74 percent of applications from 76 percent the week before.
The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.
© 2014 Thomson/Reuters. All rights reserved.