US mortgage applications reduced last week to 8 year low. This included a 30% slump in demand for refinancing. The primary reason behind the drop down in applications is the global financial crisis with rising costs of borrowing. Though the government intervened to cut down mortgage costs, yet things are yet to take hold.

However, average rates on 30 year fixed mortgages increased to 6.47% last week by about 0.21 percentage points. It is expected that rates would go up till 6.59% well above this year's low of 5.49 in January.