Mortgage refinance demand drops 20% as rates rise to 10-month high

Mortgage rates moved higher again last week, causing homeowners and potential homebuyers to pull back on borrowing.

Overall mortgage application volume decreased 5.1% from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 3.36% from 3.33%, with points increasing to 0.43 from 0.39 (including the origination fee) for loans with a 20% down payment.

As a result, applications to refinance a home loan, which are most sensitive to weekly rate moves, fell 5% for the week and were 20% lower than a year ago. That is the slowest…