WASHINGTON (1/7/16)--In the past two weeks, mortgage applications took a nose dive, with the Mortgage Bankers Association’s weekly index falling 17.4% and 11.6% in consecutive weekly reporting periods (Economy.com Jan. 6).

Following the Federal Reserve’s decision in December to raise interest rates, refinance applications dropped by a total of 40.2%.

Mortgage purchase applications, meanwhile, slipped 4.3% and 11.1% over the same two weeks. Purchase activity came in 1.6% higher on a monthly basis, and 38.8% higher year-over-year.

“Leading up to its December FOMC meeting, the Fed made it very clear that it would most likely begin to normalize monetary policy,” said Michael Ferlez, Moody’s analyst (Economy.com). “This likely drove potential homebuyers to try and submit mortgage applications before rates began to rise, which helped contribute to the substantial declines over the past two weeks.”

The 30-year fixed-rate mortgage rate climbed 1 basis point to 4.2%, which sits 6 basis points higher month-over-month and 19 basis points higher on an annual basis.

The rate for 30-year fixed-rate jumbo mortgages rose 2 basis points to 4.09% during the week.

Additional numbers from the MBA:

• Refinance applications accounted for 55.4% of all applications for the week ending Jan. 1;
   
• Adjustable-rate mortgages comprised 4.7% of all application activity; and
   
• Federal Housing Administration loans made up 14.6% of all activity.