Mortgage Applications Slump As Rates Come Off Lows
Mortgage applications slumped last week, weighed down by a plunge in demand for home
refinancing loans, as interest rates climbed from recent lows, an industry trade group said.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and purchasing loans, for the week ended Dec.
15 decreased 10.2% to 647.6 from the previous week's 721.2, which was its highest level in over a year.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.10%, up 0.08 percentage point from the previous week. Two weeks prior, 30-year mortgage rates fell to
5.98%, the lowest level since October 2005.
Interest rates, however, were below year-ago levels of 6.22%.
The MBA's seasonally adjusted purchase index fell 5.9% to 436.5. The index was also below its year-ago level of 453.1.
The purchase index is considered a timely gauge of U.S. home sales.
The group's seasonally adjusted index of refinancing applications decreased 14.6% to 1,968.8. A year earlier the index stood at 1,418.1.
The refinance share of applications decreased to 50.8% from 52.6% the previous week.
Fixed 15-year mortgage rates averaged 5.82%, up from 5.75%. Rates on one-year adjustable-rate mortgages (ARMs) increased to 5.82% from 5.76%.
The ARM share of activity decreased to 23.6% of total applications from 24.9% the previous week, its lowest since October 2003.
The MBA's survey covers about 50% of all U.S. retail residential loans. Respondents include mortgage banks, commercial banks and thrifts.