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Mortgage Applications Decline as Interest Rates Rise

Marking the second consecutive week of decreased activity, mortgage application volume fell 4.2 percent for the week ending March 19, 2010, the ""Mortgage Bankers Association"":http://www.mortgagebankers.org/default.htm (MBA) reported Wednesday.

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According to MBA's Weekly Mortgage Applications Survey, the Purchase Index increased 2.7 percent from the previous week. But the Refinance Index decreased 7.1 percent. As a result, the refinance share of mortgage activity decreased to 65 percent of total applications, the lowest refinance share observed in the survey since the week ending October 30, 2009.

Although weekly activity declined, the four week moving average for the seasonally-adjusted Market Index was up 1.9 percent. This average jumped 3.6 percent for the Purchase Index, and it was up 1.2 percent for the Refinance Index.

The slump in mortgage application volume was likely due to the week-to-week increase in interest rates.

MBA reported that the average contract interest rate for 30-year fixed-rate mortgages increased to 5.01 percent from 4.91 percent, and the average rate for 15-year fixed-rate mortgages increased to 4.33 percent from 4.24 percent.

About Author: Brittany Dunn

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