Mortgage Applications Volume Sinks as Rates Soar

Application for mortgages plunged during the week ending April 18, with surging interest rates contributing to fewer purchases and less refinancing, a weekly application survey by the Mortgage Bankers Association (MBA), revealed.

Interest rates for fixed-rate mortgages rose, while rates decreased for 1-year adjustable-rate mortgages. The volume of applications was down 3.2% compared with the same week in 2007, the MBA said.

The mortgage bankers' purchase index declined to 357.3 last week, from 381.6 the previous week and the lowest since the week of March 28. The refinancing gauge also fell to 2,286.3, the lowest level since December, from 2,866 while the share of applications for refinancing dropped to 49.2 percent from 53.5 percent.

The U.S. housing market is suffering one of the worst downturns in its history. Last week's drop in demand may indicate what is in store for the hard-hit sector this spring, which traditionally is the peak of the home-buying season.