US home loan demand drops, lowest in nearly 1 year

By Julie Haviv

NEW YORK, Dec 22 (BestGrowthStock) – U.S. mortgage applications
tumbled to their lowest level in nearly a year as a
six-week-long rise in interest rates took a significant toll on
demand, an industry group said on Wednesday.

The Mortgage Bankers Association on Wednesday said its
seasonally adjusted index of mortgage applications (USMGM=ECI: ),
which includes both purchase and refinance loans, for the week
ended Dec. 17 decreased 18.6 percent, reaching its lowest level
since the week ended Jan. 1.

The four-week moving average of mortgage applications,
which smooths the volatile weekly figures, was down 9.8
percent.

The drop in demand last week was largely a reflection of
the lack of interest by homeowners to refinance their existing
home loans.

The MBA’s seasonally adjusted index of refinancing
applications (USMGR=ECI: ) decreased 24.6 percent, reaching its
lowest level since the week ended April 30.

“Refinance application volume dropped sharply this week as
mortgage rates held near six month highs,” Michael Fratantoni,
MBA’s Vice President of Research and Economics, said in a
statement.

“Purchase applications fell for a second week, with the
level of applications little changed over the past month,
indicating that home sales are likely to remain relatively weak
over the next few months,” he said.

The MBA’s seasonally adjusted purchase index (USMGPI=ECI: ),
a tentative early indicator of home sales, decreased 2.5
percent, reaching its lowest since the week ended Nov. 12.

Borrowing costs on 30-year fixed-rate mortgages, excluding
fees, averaged 4.85 percent, up 0.01 percentage point from the
previous week. Interest rates, however, were below their
year-ago level of 4.92 percent.

Rising U.S. Treasury yields, on expectations that consumers
pending and tax policy would boost growth, have helped push
mortgage rates higher.

The MBA said fixed 15-year mortgage rates averaged 4.22
percent, up from the previous week’s 4.21 percent.

The MBA’s survey has been conducted weekly since 1990.

More insight into the state of the U.S. housing market will
emerge later on Wednesday when the National Association of
Realtors releases November existing home sales data. On
Thursday the Commerce Department releases November new home
sales data.

US home loan demand drops, lowest in nearly 1 year