Recent rate increases have taken a toll on mortgage applications.

Total mortgage applications-including refinancings and home purchases-plunged 7.6 percent week-to-week, according to the Mortgage Bankers Association’s weekly mortgage market survey for the week ending May 29.

The numbers were adjusted to account for the Memorial Day holiday.
Refinance activity showed the steepest decline, dropping 12 percent week-to-week. Refinancing applications were at the lowest level in more than a year, with volume that is 1 percent below year-ago levels.

“With mortgage rates above 4 percent, refinance volume continues to decline, and with the refinance share at its lowest level in over a year, we have again crossed over into a purchase-dominated market,” said Mike Fratantoni, MBA’s chief economist. “We expect economic growth, and importantly wage growth, will pick up in the second half of the year, which will provide further support to a growing home-purchase market.”

Applications for home purchases-viewed as a monitor of future home-buying activity-also declined last week, dipping 3 percent from the previous week. However, purchase applications remain 14 percent higher than year-ago levels.

The average on the 30-year, fixed-rate mortgage dropped to 4.02 percent last week from a 4.07 percent average a week prior, MBA reported.