NEW YORK (Reuters) - Applications for home mortgages declined last week as home loan interest rates rose for a fifth consecutive week, to seven month highs, an industry group said on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted composite index of mortgage application activity declined 2.3 percent to 589.7 in the week ended December 10.
Application activity slumped as fixed 30-year mortgage contract rates rose to 4.84 percent in the week, the highest level since early May, from 4.66 percent in the prior week, according to the MBA data. Rising U.S. Treasury yields, on expectations that consumer spending and tax policy would boost growth, have helped push mortgage rates higher.
The jump in rates is effectively reducing credit for the U.S. housing market that has remained in a fragile state despite two years of government efforts to curb foreclosures and stabilize home prices. Most analysts expect home prices to resume their fall in 2011, creating a drag on the economy.
The MBA’s seasonally adjusted index of refinancing applications fell 0.7 percent to 2,910.9 last week, the lowest since June 4. The gauge of loan requests for home purchases declined 5 percent to 200.3.
Reporting by Al Yoon; Editing by Diane Craft