By Newsmax Wires   |   Wednesday, 06 Jan 2016

Mortgage application volume plunged more than 25 percent during the past two weeks in the wake of the Federal Reserve’s first rate hike in nearly a decade.

Total mortgage applications slid 27 percent on a seasonally adjusted basis for the week that ended Friday, compared with two weeks earlier, according to the Mortgage Bankers Association. The numbers for both weeks were adjusted for the Christmas and New Year holidays, when banks were closed, CNBC reported.

Refinance applications, which are most rate-sensitive, decreased 37 percent from two weeks ago, seasonally adjusted, CNBC reported. Applications to purchase a home fell 15 percent, but were 22 percent higher than the same period one year ago.

"Refinance application volume increased for three weeks in a row in early December ahead of the Fed's announcement that it was raising the federal funds rate," said Lynn Fisher, the association's vice president of research and economics. "During the two weeks following their announcement, holiday-adjusted refinance activity dropped substantially, even though the 30-year fixed rate increased by only 4 basis points over the same period."

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.20 percent last week from the previous week. That is its highest level since July, from 4.19 percent, with points decreasing to 0.42 from 0.49 (including the origination fee) for 80 percent loan-to-value ratio loans.

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