Mortgage applications plunged 8.1% on a seasonally adjusted basis during the week ended Feb. 4, the Mortgage Bankers Association said, citing its Market Composite Index. 

The average contract interest rate for 30-year fixed-rate mortgages backed by the Federal Housing Administration increased to 3.93% from 3.86%, and the average contract interest rate for a 15-year fixed-rate mortgage rose to 3.16% from 3.01%. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances of more than $647,200 increased to 3.62% from 3.59%. 

On an unadjusted basis, the market composite index, which measures mortgage-loan application volume, declined 6%. The refinance index, meanwhile, slid 7% from the previous week and was down 52% from the same week a year ago. The refinance share of mortgage activity decreased to 56.2% of total applications from 57.3% the previous week. 

The seasonally adjusted purchase index fell 10% from the previous week, while the unadjusted purchase index dipped 3% and was 12% lower than one year ago.   

“Mortgage rates continued to edge higher last week, with the 30-year fixed rate climbing to 3.83%,” MBA associate vice president of economic and industry forecasting Joel Kan said in a press release. “Rates followed the U.S. 10-year yield and other sovereign bonds as the Federal Reserve and other key global central banks responded to growing inflationary pressures and signaled that they will start to remove accommodative policies. With rates 87 basis points higher than the same week a year ago, refinance applications continued to decrease.” 

The adjustable-rate mortgage share of activity was flat at 4.5% of total applications. The FHA share of total applications increased to 8% from 7.7% in the preceding week, while the VA share of applications rose to 10% from 9.1%. The USDA share of applications was flat at 0.4%. 

“Purchase activity slowed after the previous week’s gain,” Kan added. “Both conventional and FHA purchase applications saw proportional declines, resulting in purchase activity overall dropping 10%. The average loan size again hit another record high at $446,000. Activity continues to be dominated by larger loan balances, as inventory remains tight for entry-level buyers.”