Mortgage applications drop steeply on higher interest rates
Posted by on December 23, 2010
A six-month high in mortgage rates sent loan applications tumbling to their lowest level in six weeks.
The Mortgage Bankers Association (MBA) said Wednesday that mortgage loan applications dropped 18.6 percent in the week that ended Dec. 17, while refinancing plummeted 24.6 percent, the sixth straight week of declines and its lowest level since April 30.
“Refinance application volume dropped sharply this week as mortgage rates held near six-month highs,” said Michael Fratantoni, MBA’s vice president of Research and Economics.
The average interest rate for 30-year fixed-rate mortgages increased to 4.85 percent from 4.84 percent, while 15-year fixed-rate mortgages increased to 4.22 percent from 4.21 percent, after hitting historical lows over the past several months.
The refinance share of mortgage activity decreased to 72.3 percent of total applications from 76.7 percent the previous week, the lowest refinance share observed in the survey since early June.
The purchase index decreased 2.5 percent from one week earlier for the second straight time, with applications changing little over the past month, a sign that home sales will remain weak during the next several months, Fratantoni said.
The four-week moving average, which smooths the volatile weekly figures, was down 9.8 percent.
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