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Mortgage demand declines as rates rise

February 09, 2011 12:40PM

Fewer Americans applied for mortgages last week as interest rates jumped to their highest levels since last spring, according to today’s data from the Mortgage Bankers Association. Refinance applications in the U.S. declined by 7.7 percent on a week-over-week basis, while purchase applications fell by 4.8 percent from the previous week, bucking the usual trend at the beginning of the spring buying season. According to Michael Fratantoni, vice president of research and economics at the MBA, that’s because mortgage rates are rising on the heels of better-than-expected economic indicators. The rate for the popular 30-year fixed-rate mortgage saw its average contract rate spike to 5.13 percent, from 4.81 percent one week earlier, in the largest week-over-week increase since June 2009. Rates for the 15-year mortgage also rose sharply, to 4.29 percent from 4.13 percent in the previous week. “Fewer homeowners with equity have any incentive to refinance,” Fratantoni said. TRD