The Washington based group Mortgage Bankers Association (MBA) reported today that its index measuring the number of mortgage applications in the United States plummeted 16.5 percent for the week ending November 26th. The decline is the largest this year and is attributed mainly to higher lending rates which caused a drop in financing.
The MBA’s measurement of financing also saw its biggest drop for the year at 21.6 percent and its gauge of purchases increased 1.1%. However, the average rate on a 30 year fixed rate mortgage increased from 4.5% last week to 4.56% this week, its highest level since August after the economy became stronger at the end of the year.
Chris Rupkey explained “Mortgage rates are higher than they were a few weeks ago so refinancing and new purchase mortgage volumes are going to be slow, probably until we get into the new year”. Rupkey is chief financial economist at Bank of Tokyo Mitsubishi UFJ Ltd in New York. It will take a long time for home sales and construction to improve because inventory has expanded dramatically due to foreclosures, and unemployment is almost 10 percent.
Borrowing costs reached 4.21 percent for the week ending October, the lowest since 1990 when records were kept, but have since been rising.
