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Mortgage demand in U.S. cools as loan interest rates rise

Mortgage demand in U.S. cools as loan interest rates rise
Wednesday's report noted that an uptick in COVID-19 cases in the United States also likely played a role in the decrease in demand. File Photo by Alexis C. Glenn/UPI | License Photo

Aug. 18 (UPI) -- The U.S. homebuying market has cooled off a bit over the past week -- due mainly because of rising mortgage rates, experts said Wednesday.

The Mortgage Bankers Association said in its weekly report that applications to buy were down 1% -- and off nearly 20% from August 2020 -- and applications to refinance were down 5%.

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Coinciding with the drop-off in applications, the group said, was a rise in the 30-year fixed rate mortgage to 3.06% from 2.99%.

Wednesday's report noted that an uptick in COVID-19 cases in the United States also likely played a role in the decrease in demand.

"Mortgage rates were at their highest levels in around a month," Joel Kan, MBA associate vice president of economic and industry forecasting, said in a statement.

"Mortgage rates followed an overall increase in Treasury yields last week, which started higher from the strong July jobs report before slowing because of weaker consumer sentiment and concerns about rising COVID-19 cases."

Kan added that one reason for a decline in refinancings is a smaller number of eligible homeowners.

The report said FHA applications increased by 0.5% last week and VA applications were up 0.7%.

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