source : money.cnn.comNEW YORK (Reuters) -- U.S. mortgage applications dropped last week, as a jump in home loan rates sapped demand for refinancing, the Mortgage Bankers Association said Thursday.
Average 30-year mortgage rates leaped 0.35 percentage points in the week ended Jan. 16 to 5.24%, after touching the lowest level in the history of the trade group's survey, which dates to 1990.
A spate of applications when the rate for 30-year fixed mortgages hit 4.89% the prior week had propelled the refinancing index to a 5-1/2-year peak.
The Mortgage Bankers Association's seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, fell 9.8% to 1,195.3 in the past week.
That was the lowest level since mid-December but still about three times higher than some readings in late October and in November before government actions to slash home borrowing costs took hold.
The Mortgage Bankers Association's refinance applications index dropped 12.4% to 6,491.8, while the purchase applications gauge climbed 2.5% to 303.1 on a seasonally adjusted basis.
Refinancings made up 83.3% of total loan requests, just below the prior week's 85.3% share, which was the highest share on record, the MBA said.
Even with the increase in mortgages rates, the rates are at least one percentage point less than three months ago, driving the rush to cut costs by refinancing existing loans.
Home buying is a much different story. Requests for loans to buy homes rose in the latest week but remained near eight-year lows, with the recession and potential job losses stifling appetite.
The trend of declining home prices has also kept many potential buyers at bay.
These factors dragged home builder sentiment to an all-time low this month, the National Association of Home Builders said on Wednesday.
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