Jan. 6 (Bloomberg) — Mortgage applications in the U.S. last week held near a six-month low as rising interest rates discouraged homeowners from refinancing.
The Mortgage Bankers Association’s index of loan applications rose 0.5 percent to 462.2 in the week ended Jan. 1, after plunging 23 percent a week earlier to reach the lowest level since June. The group’s refinancing gauge dropped to an almost five-month low, while the purchase index climbed.
Rates on 30-year fixed mortgages two weeks ago exceeded 5 percent for the first time since October, discouraging homeowners from refinancing. A growing economy and more jobs may boost home sales this year after a government tax credit helped the market rebound in 2009 from the worst slump since the Great Depression.
“Rising mortgage rates will clip the wings off the refinance market for a time,†Michael Larson, a housing analyst at Weiss Research in Jupiter, Florida, said before the report. “However, housing demand looks set to stabilize as the job market improves and the economy recovers. We’ll likely see purchase applications climb over time as a result.â€
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