The mortgage applications in the United States to buy homes dropped to their lowest level last week since February this year as rates of interest on 30-year home loans increased from the previous week’s 16-month trench, an industry group report said on Wednesday.
The Mortgage Bankers Association (MBA) on Wednesday said that the loan requests for home purchases at its seasonally adjusted index, which is a leading indicator of the sales of homes, declined 5.0 percent in the week that ended on October 24, to its lowest level since February. It was 15 percent lower as compared to the same week a year earlier.
Fixed 30-year mortgage rates averaged up three basis points to 4.13 percent in the week from 4.10 percent the week before.
The seasonally adjusted index of refinancing applications of the Washington-based group declined 7.4 percent, led by a steep dip in the requests of jumbo loans, whose size is above USD 417,000.
In a statement, MBA’s chief economist Mike Fratantoni said, “Borrowers with jumbo loans tend to be most sensitive to the changing rates and that sensitivity has been clearly apparent in the past few weeks with double and even triple digit percentage changes in refinance application volume for jumbo loans.”
On the other hand, the average loan size for refinance applications declined to USD 263,600 in the latest from a survey high of USD 306,400 the prior week.
The decreased was fueled by a 41 percent drop in refinance applications for loans greater as compared USD 729,000, which had increased nearly 130 percent a week earlier, said Fratantoni.
The weekly mortgage application activity of MBA, which includes both refinancing and home purchase demand, dropped 6.6 percent in the latest week.
According to MBA, the survey covers over 75 percent of applications of the US retail residential mortgage.
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