Mortgage Activity Slows as Rates Inch Up

(Mortgage activity report updated with analyst commentary.)

WASHINGTON (TheStreet) -- Mortgage applications edged lower last week as mortgage rates edged higher.

The volume of mortgage loan applications decreased 0.9% on a seasonally adjusted basis in the week ending Dec. 3, the Mortgage Bankers Association said early Wednesday. Mortgage activity fell 16.5% in the prior week.

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Refinancing applications decreased 1.4% from the previous week to the lowest level observed since June. It was the fourth consecutive weekly drop in refinancing activity. Refi activity tumbled 21.6% in the previous week. New-home purchase loan applications pushed 1.8% higher from the prior week -- the third weekly increase -- to its highest level since early May.

"The housing market continues to bounce along this fragile bottom," Neil Dutta, an economist at Bank of America Merrill Lynch Global Research, told Bloomberg ahead of the report.

A total of 75.2% of all loan applications last week were for refinancing existing mortgages, up slightly from a 74.9% share in the prior week.

The average rate on a 30-year fixed mortgage increased to 4.66%, from 4.56% in the prior week. It was the highest rate observed since July and was the fourth consecutive weekly increase. Still, mortgage rates remain near all-time lows.

Some potential homebuyers have decided to go ahead and sign contracts, hoping to lock in still-low rates. Homebuilder Toll Brothers(TOL), which surprised investors with a return to year-over-year profitability in its fiscal fourth quarter, said deposits jumped 10% in the second half of November compared with year-earlier results.