Mortgage applications fell 6.8% on a seasonally adjusted basis during the week ended March 25, as mortgage rates hit their highest level in three years, the Mortgage Bankers Association said, citing its Market Composite Index. 

The average contract interest rate for conforming 30-year mortgages of $647,200 or less jumped to 4.8% from 4.5%, while the rate for 30-year fixed-rate mortgages backed by the Federal Housing Administration increased to 4.66% from 4.4%. 

“Even with the ongoing climb in rates, purchase application volumes were little changed last week. This is particularly auspicious, as we are now in the beginning of the spring homebuying season, and those shopping for homes are struggling with not only higher and more volatile mortgage rates, but also an ongoing shortage of homes on the market,” MBA Senior Vice President and Chief Economist Mike Fratantoni said in a press release. “Given these hurdles, it appears to be promising news that purchase application volume has not declined, as many potential buyers are likely feeling the squeeze in their purchasing power from the jump in rates.”  

The average contract interest rate for 30-year fixed- mortgages with jumbo loan balances of more than $647,200 surged to 4.40% from 4.11%, and the average contract interest rate for a 15-year fixed-rate mortgage increased to 4.01% from 3.76%. 

On an unadjusted basis, the market composite index, which measures mortgage-loan application volume, slid 6%. The refinance index, meanwhile, fell 15% from the previous week and was down 60% from the same week a year ago. The refinance share of mortgage activity decreased to 40.6% of total applications from 44.8% the previous week. 

The seasonally adjusted purchase index rose 1% from the previous week, while the unadjusted purchase index gained 1% as well but was 10% lower than one year ago. 

The adjustable-rate mortgage share of activity increased to 6.6% of total applications. The FHA share of total applications rose to 9.3%, while the VA share of total applications decreased to 9.5% from 9.8%. The USDA share of total applications rose one basis point to 0.5%.