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Home Loan Applications Fall Sharply

The Mortgage Bankers Association released its weekly report on mortgage applications in the US on Wednesday, which showed the lowest level in four months for the data, as interest rates climbed from record-lows.

The industry group's seasonally adjusted index of applications, a measure that includes both purchase applications and refinance loans, dipped 14.4 percent for the week ending November 12th to 713.6. It;s the lowest the number has been since the week ending July 9th.

The group also reported that borrowing costs on 30 year fixed rate home loans spiked to a two-month high of 4.46 percent for the week from 4.28 percent in the week prior. The figure reached its lowest reading in the 20-year history of the survey last month at 4.21 percent.

Interest rates have surprisingly risen in the last couple of weeks despite the Fed's announcement to renew its quantitative easing program by purchasing $600 billion in Treasury bonds. The strategy is designed to keep the yields of Treasurys, which are commonly used to calculate interest rates, down. But the yields have risen amid concerns that the effort would be the Fed's last, or would be cut short should the economy continue to show signs of a recovery.

The MBA's index of applications for refinancing loans fell 16.5 percent last week to 3,381.0, while the purchase application index slid 5 percent to 179.2. The group reported that the average rate for a 15 year fixed rate loan during the week was 3.87 percent, up slightly from the previous week's 3.64 percent.

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