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U.S. Mortgage Refinance Applications Slump to Lowest Since June

This is a syndicated repost courtesy of Confounded Interest. To view original, click here. Reposted with permission.

It is, after all, November and we are in the season when mortgage applications usually plunge after peaking in early May. Rising interest rates throw an additional wrinkle into the works.

(Bloomberg) — Mortgage applications in the U.S. slumped last week after the sharpest increase in borrowing costs since mid-2013, signaling tougher sledding for the housing market.

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The Mortgage Bankers Association’s index of purchase and refinancing applications dropped 9.2 percent in the period ended Nov. 11 to 436.3, the lowest level since January. The average rate on a 30-year fixed loan soared 18 basis points, the most since June 2013, to 3.95 percent.

The Washington-based group’s measure of purchase applications sank 6.2 percent to 197, while an index of refinancing slumped 10.9 percent to an almost eight-month low.

Financing costs have surged since the Nov. 8 election on speculation President-elect Donald Trump’s pro-growth agenda will spark faster inflation.

And The Fed has a 94% probability of raising their target rate at the December meeting.

Seasonally unadjusted refinancing applications fell about 10.5% from the preceding week, back to June levels.

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The seasonally unadjusted PURCHASE application index fell 9.6% from the previous week and was 3 percent higher than the same week one year ago.

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Since 1995, the US has experienced a bubble in home prices AND mortgage purchase applications. Since the financial crisis, only home prices are rising rapidly. Labor force participation and US homeownership rates plunged. At least mortgage purchase applications crashed, but are slowly regaining strength. Until rates rose, that it.

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The MBA’s 30 year fixed-rate index rose 4.77% from the previous week.

Let’s see which Fed Chair shows up over the next year: the dove or the hawk.

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Wall Street Examiner Disclosure: Lee Adler, The Wall Street Examiner reposts third party content with the permission of the publisher. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler, unless authored by me, under my byline. I curate posts here on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. Some of the content includes the original publisher's promotional messages. No endorsement of such content is either expressed or implied by posting the content. All items published here are matters of information and opinion, and are neither intended as, nor should you construe it as, individual investment advice. Do your own due diligence when considering the offerings of information providers, or considering any investment.

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