US Mortgage Applications Hit 15-year Low

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A new data released by industry firm Mortgage Bankers Association showed that the number of mortgage applications for home purchases dropped to a 15-year low last week as US home buyers hold off spending in the wake of the recent credit down grade.

The number of mortgage applications for home purchases dropped to a 15-year low last week as US home buyers hold off spending in the wake of the recent credit down grade, an industry group said on Wednesday.

In a report, the Mortgage Bankers Association (MBA) said that seasonally adjusted mortgage index – which includes refinancing and new home purchases – dropped by 2.4 percent in the week that ended August 19.

The MBA noted that loan applications for home purchases slipped 5.7 percent, the lowest since December 1996; while refinancing applications also dropped by 1.7 percent due to higher interest rates.

Mike Frantantoni, MBA vice-president for research and economics, said that the volatility of markets and continued uncertainty over the US economy kept prospective buyers from spending their hard-earned cash.

“It [the decline] has impacted borrowers across the board, including purchase application for jumbo mortgage loans, which fell by more than 15 percent. Also, purchase applications for the US government’s housing programs fell by 8.2 percent during the period,” Frantantoni said.

The executive, on the other hand, said that shares of refinance applications increase from 78.8 percent to 79.8 percent during the period.

But despite the gloomy markets conditions, the United States government remained confident the economy will soon bounce back from the slump.

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