WASHINGTON – Mortgage applications nationwide plunged nearly 20 percent last week as both purchase and refinance applications fell, according to a report today from the Mortgage Bankers Association. Bloomberg News said the decline was the sharpest since 2004.
The trade group’s seasonally adjusted Market Composite Index – a measure of mortgage loan application volume – fell 19.5 percent to 653.8 points in the week ended Dec. 14, after rising 2.5 percent the week before (March 16, 1990 = 100).
The MBA’s Refinance Index fell 27.3 percent to 2,093.6 points after rising 4.3 percent in the week ended Dec. 7. The Purchase Index fell 13.1 percent to 317.1 points, after falling 2.3 percent the week before.
Refinancing accounted for 53.2 percent of loan applications last week, down from the previous week’s 57.6 percent. Adjustable-rate mortgages (ARMs) increased to 9.9 percent of total home-loan applications last week from 9.4 percent in the week ended Dec. 7.
Meanwhile, interest rates increased last week, the MBA found. The average 30-year fixed-rage mortgage cost borrowers 6.18 percent, up slightly from the previous week’s average rate of 6.07 percent, while the rate on the average one-year ARM rose to 6.48 percent from the previous week’s 6.31 percent.
“The housing recession continues to grind away,” Brian Bethune, an economist at Global Insight Inc. in Lexington, Mass., told Bloomberg News. The tighter lending environment “has disqualified a large number of borrowers and continues to restrain demand.”
The Mortgage Bankers Association is a trade group representing the real estate finance industry. Its 3,000 member companies include mortgage firms, commercial banks, thrifts and life insurance companies. Additional information, including the MBA’s Weekly Application Survey, is available at www.mortgagebankers.org.
