The Mortgage Bankers Association said its seasonally adjusted composite index of mortgage application activity declined 2.3 percent to 589.7 in the week ended Dec. 10.
Application activity slumped as fixed 30-year mortgage contract rates rose to 4.84 percent in the week, the highest level since early May, from 4.66 percent in the prior week, according to the MBA data. Rising U.S. Treasury yields, on expectations that consumer spending and tax policy would boost growth, have helped push mortgage rates higher.
The jump in rates is effectively reducing credit for the U.S. housing market that has remained in a fragile state despite two years of government efforts to curb foreclosures and stabilize home prices. Most analysts expect home prices to resume their fall in 2011, creating a drag on the economy.
The MBA's seasonally adjusted index of refinancing applications fell 0.7 percent to 2,910.9 last week, the lowest since June 4. The gauge of loan requests for home purchases declined 5 percent to 200.3.
Democrats Push Trillion-Dollar Measure Loaded With 'Earmarks'
A 1,924-page "omnibus" bill to fund the government is headed for a Senate vote that will put lawmakers from both parties on the spot over the practice of earmarking money for projects.
The $1.2 trillion measure, unveiled by Democrats today, includes thousands of earmarks and comes about a month after Republicans adopted a non-binding moratorium on pushing for such projects. The Senate's Democratic majority aims to overcome that objection with the help of Republicans such as Senators George Voinovich of Ohio and Bob Bennett of Utah who scoff at complaints over the projects.
"I have a disagreement with my colleagues on earmarks" Voinovich told reporters today. "We're fooling the American people when we tell them the problem is earmarks."
Senator Jim DeMint, a South Carolina Republican, urged his colleagues to deny Democrats the votes needed to advance the bill that finances government agencies and programs for the fiscal year that ends Sept. 30, 2011.
"All of us know that it's really bad for our party to pass an omnibus with earmarks," he told reporters.
Fellow South Carolina Republican Senator Lindsey Graham called the impending vote a "defining moment" for his party, one that will be closely watched by some voters. "This represents the old way of doing business," he said.
Inouye Confident
Democrats, who control the Senate with 58 votes, would need 60 votes to overcome procedural hurdles. Senate Appropriations Committee Chairman Daniel Inouye, a Hawaii Democrat, said today he is confident the measure would be passed before Congress adjourns for the year.
The bill's earmarks would cost about $8 billion, according to Rob Blumenthal, an Inouye spokesman.
A stopgap measure funding the government expires Dec. 18. If Senate Democrats fall short of the 60 votes needed to proceed on their bill, they will likely take up a House-passed version of the measure that omits earmarks.
Republicans in both chambers have been pushing for a short- term funding extension that would extend into early next year. With Republicans taking the majority in the next House session and the party gaining seats in the Senate, that would make it easier for them to prevail with promised spending cuts.
The omnibus measure would cap a year that included a breakdown in the congressional budgeting process, as Democrats were unable to pass a tax-and-spending blueprint or any of the 12 annual appropriations bills to fund federal agencies for the fiscal year that began Oct. 1.
The legislation unveiled today includes about $20 billion more than the House plan, according to a summary provided by the Senate Appropriations Committee. It would provide $1.108 trillion in annual appropriations, along with about $160 billion to fund the wars in Iraq and Afghanistan.
Like the House bill, it includes provisions opposed by the White House that would bar the administration from bringing Khalid Sheikh Mohammed or other terrorist suspects held at Guantanamo Bay, Cuba to the United States for trial.
A list provided by Democrats of earmarks included in the legislation runs more than 300 pages. Bennett, who worked in the Department of Transportation during President Richard Nixon's administration, said that without the earmarks, White House officials would spend money on their preferred projects or lawmakers would prod agency heads to fund projects.
"I was on the receiving end of those phone calls," said Bennett. He said the earmarking process is "at least transparent, and it's an improvement over the way things used to be and the way things will go back to being if they succeed in eliminating the earmark process."
Bennett was denied re-nomination to fourth term earlier this year by Utah Republicans; Voinovich decided to retire after two terms.
