US mortgage demand keeps falling as rates hit six-month high

The U.S. home loan demand continued to fall in the week ended Dec.10, posting a decline for three straight weeks as the mortgage rates hit a six-month high, the Mortgage Bankers Association (MBA) said on Wednesday.

The total loan applications index, a measure of mortgage loan application volume, fell 2.3 percent on a seasonally adjusted basis from a week earlier.

“Treasury rates increased last week following news that lower tax rates could be extended for another two years, boosting growth prospects. With this move, mortgage rates reached their highest level in more than six months,” said Michael Fratantoni, vice president, research and economics, MBA.

While the average contract interest rates for 30-year fixed rate mortgage increased to 4.84 percent from 4.66 percent in the previous week, 15-year fixed-rate mortgages increased to 4.21 percent from 3.98 percent.

The refinancing loans index was down 0.7 percent last week, posting a decline for fifth consecutive week. The index touched its lowest level since June this year.

“Not surprisingly, with rates up more than half a percentage point over the past month, refinance activity has declined sharply,” Fratantoni said.

Also, the purchase decreased 5 percent in the week, posting a decline after increasing for three consecutive weeks.

“Home purchase applications dropped this week following three weeks of increases, but remain near levels last seen in early May,” Fratantoni added.