October 24, 2012 / 11:04 AM / 8 years ago

Mortgage applications slump as borrowing rates rise: MBA

NEW YORK (Reuters) - Applications for home mortgages fell sharply last week, registering the biggest percentage decline in a year as demand for both purchase loans and refinancings tumbled, data from an industry group showed on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, fell by 12 percent in the week ended October 19.

The seasonally adjusted purchase index, which measures loan requests for home purchases, fell 8.3 percent over the previous week. Demand for purchase loans is a leading indicator of home sales.

The MBA’s seasonally adjusted refinance index fell 12.9 percent from the previous week to reach its lowest level since late August. The refinance share of total mortgage activity decreased to 81 percent of total applications from 82 percent the prior week.

Fixed 30-year mortgage rates rose by 6 basis points to an average of 3.63 percent, the highest in a month.

The survey covers over 75 percent of U.S. retail residential mortgage applications, according to the MBA.

Reporting by Atossa Abrahamian; Editing by Leslie Adler

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