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U.S. mortgage applications tumble last week

by Mike Robinson

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© Reuters. FILE PHOTO A view of Chico’s newly constructed houses, California. This is where Paradise was destroyed by fire, California. September 24, 2020. REUTERS/Saif Tawfeeq/File photo

WASHINGTON (Reuters] – U.S. Mortgage applications dropped to their lowest levels in two years, as higher mortgage rates caused a drop in demand for loans to buy homes and to refinance activity. A survey was conducted Wednesday.

According to the Mortgage Bankers Association, its Market Composite Index (a measure of volume for mortgage loans) fell 13.1% from the previous week. It was 466.4. It was the lowest level seen since December 2019.

While the refinance index fell 15.6%, the purchase index decreased 10.1%. According to the MBA, the average 30-year fixed mortgage rate was 4.06%. This is an increase of 4.05% from the previous week.

With mortgage rates rising, the Federal Reserve will likely raise interest rates to curb high inflation in March. According to economists, the U.S. central banks could increase interest rates by seven times this year.

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