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Mortgage Applications Fall as Interest Rates Rise

The week ending Jan 1, 2010 saw a decline in the number of people seeking mortgages from banks and lenders. The drop was reported to be 22.8 percent based on a seasonally adjusted index. Though a rise in the rate of interest could be cited as a reason for this fall, the fact that people was out for holidaying during this week cannot be overlooked.

Before Christmas, the index was down by 46.9 percent on an unadjusted basis, which saw a slight improvement of 0.4 percent in the following week. During these two weeks, the unadjusted purchase index fell by 33.1 percent and 5 percent, respectively. Last year, the percentage fall in loan applications was 26.3 percent and 28.2 percent respectively.

Interest rates, on the other hand, increased for fixed-rate mortgages during the two-week period. 30-year fixed-rate rose to 5.18 percent from 4.92 percent while 15-year fixed-rate mortgage saw a rise from 4.34 percent to 4.62 percent.

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