Applications for home loans declined for the fifth consecutive week as interest rates continued to edge higher. According to the Mortgage Bankers Association’s latest report, for the week ended November 29, loan applications plunged 12.8 percent on a seasonally adjusted basis from one week earlier, the 22nd drop in only 29 weeks. That followed a declined of 0.3 percent in the previous week.
The figure includes both refinancing and home purchase demand and covers more than 75 percent of all domestic retail residential mortgage applications. Furthermore, the seasonally adjusted purchase index fell 4 percent from the prior week and is near its worst level in a year.
The industry group’s refinance index fell the hardest, down 18 percent from the prior week, it’s lowest reading since the week ending September 6, 2013. Overall, the refinance share of mortgage activity accounted for 63 percent of total applications compared to 66 percent from a week earlier.
The average interest rate for a 30-year fixed-rate mortgage increased from 4.48 percent to 4.51 percent, the highest rate in a month. The most recent average rate for a 15-year fixed-rate mortgage came in at 3.56 percent, after spending two weeks at 3.52 percent.
Even though interest rates are low on a historic basis, affordability is near its worst level in about five years due to surging home prices. Earlier this week, CoreLogic reported that home prices were up 12.5 percent in October on a year-over-year basis, logging their 20th consecutive month of gains. In fact, prices have posted double-digit gains for nine straight months.
“In terms of home price appreciation, the housing market appears to be catching its breath as we head into the final months of 2013,” said Anand Nallathambi, president and chief executive officer of CoreLogic. “The deceleration in month-on-month trends was anticipated as strong gains in home prices over the spring and summer slow in line with normal seasonal patterns and the impact of higher mortgage interest rates.”
Follow Eric on Twitter @Mr_Eric_WSCS