Loan Applications Post Big Drop Last Week

Applications for mortgages dropped by their largest percentage in a year as mortgage rates inched up slightly last week, the Mortgage Bankers Association reports.

Loan applications — including those for refinancing and home purchases — fell 12 percent for the week ending Oct. 19, according to MBA’s weekly mortgage market index.

Separated out, applications for just home purchases, viewed as a leading gauge for future home sales, dropped 8.3 percent compared to the previous week. Meanwhile, refinance applications dropped 12.9 percent, reaching its lowest level since August.

The 30-year fixed-rate mortgage, the most popular among home buyers, rose 6 basis points last week, averaging 3.63 percent–its highest in a month, Reuters reports.

In a separate report this week, MBA gave a snapshot of its outlook for the mortgage market next year. MBA says it expects mortgage rates to rise in 2013, although MBA says it predicts 30-year rates to stay below 4 percent until the middle of next year. MBA also says it projects purchase applications to climb, reaching $585 billion next year.

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