Mortgage Demand Falls to August Levels, To Drop Further In 2010

According to a Mortgage Bankers Association survey posted by Reuters, the demand for US mortgages held last week were close to the six-month lows on long-term borrowing costs reaching a new high since August.

With average 30-year mortgage rates jumping 0.10 percentage points to 5.18% in the week starting January 1. This reflects more than half a percentage point gain from the record lows reached in March. As a result, refinance requests have dropped to levels that were last seen in early August 2009.

Reuters has quoted Michael Lea, director of the Corky McMillin Center for Real Estate at San Diego State University, as saying that mortgage rates will continue to rise significantly throughout the year, resulting in a sharp decline in refinance volumes.