Mortgage Application Volume Dips 10% in Latest Weekly Survey

Consumer demand for mortgages waned last week, as interest rates edged up for the first time in six weeks.

The ""Mortgage Bankers Association"":http://www.mortgagebankers.org (MBA) reported Wednesday that its index of total mortgage loan application volume dropped 10.5 percent for the week ending October 15, 2010.
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It's the steepest plunge seen in mortgage activity in the past four months, and some market observers are attributing the falloff to the recent turmoil in the industry surrounding foreclosure paperwork errors by servicers and the uncertainty it's brought for buyers of distressed properties.

MBA's refinance index fell 11.2 percent from the previous week, while home purchase applications dipped 6.7 percent.

MBA reported that the average contract interest rate for 30-year fixed-rate mortgages increased to 4.34 percent last week, up from 4.21 percent. The average rate for 15-year fixed mortgages rose to 3.74 percent from 3.62 percent.

It's the first increase recorded by MBA for both 30-year and 15-year rates in a month and a half.