WASHINGTON, Jan. 3 (Xinhua) -- Mortgage applications in the United States dropped sharply last week, as homebuyers were concerned about a slower economic growth and ongoing government shutdown, according to Mortgage Bankers Association (MBA) on Thursday.
For the week ending December 28, MBA's market composite index, a measure of mortgage loan application volume, saw a significant 9.8 percent drop from one week earlier.
"Mortgage applications fell over the past two weeks, even as the 30-year fixed-rate mortgage decreased to 4.84 percent, its lowest since September 2018," said Joel Kan, associate vice president of economic and industry forecasting of MBA.
The refinance index, a gauge of mortgage refinance activity in the United States, also decreased 12 percent from the previous week. Meanwhile, the purchase index fell 8 percent from one week earlier.
"Even with lower borrowing costs, both purchase and refinance applications decreased over the two-week holiday period, as both conventional and government applications dropped," said Kan.
Besides, a weaker economy outlook could further bring down the demand in housing market. Last month, the Federal Reserve lowered its 2019 growth forecast for U.S. economy from 2.5 percent to 2.3 percent.
"Investors continued to show a preference for safer U.S. Treasuries, as concerns over U.S. and global economic growth, along with uncertainty over the current government shutdown, drove rates lower," said Kan.
Kan said the ongoing partial government shutdown, which has dragged into the 13th day, has negative impact on the housing market.
"Part of the decline in mortgage applications was possibly because of the government shutdown, as concerns over delays in FHA (Federal Housing Administration) application processing time likely contributed to the weakness in activity," he said.
