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According to the Mortgage Bankers Association, U.S. mortgage applications plummeted last week as home loan rates leaped.

The standard 30-year mortgage rates jumped 0.35 percentage points last week and reached 5.24%, after it hit the lowest level in the trade group’s history dating back to 1990.

When 30-year fixed mortgage rates hit 4.98% the week before, a wave of mortgage applications drove the refinancing index to a 5-1/2 year max.

The mortgage applications index of the Mortgage Bankers Association (this includes both the purchases and refinance loans that are adjusted seasonally), plunged 9.8% to 1,195.3 in the past week.

The refinance applications index of the Mortgage Bankers Association dropped 12.4% to 6,491.8, as the purchase applications numbers ascended 2.5% to 303.1 on seasonally updated basis.

The Mortgage Bankers Association said that refinancing cover 83.3% of all loan applications, a few numbers below the previous week’s 85.3% share, which was noted as the highest rate on record.

With the recession and possible loss of jobs, the request for home loans climbed in the last week. The tendency for the home prices to wane is also another factor that keeps potential home buyers on hold.

According to the National Association of Home Builders, these many factors pulled home builder appetite very low this month – EMC Mortgage Business Environment confirmed this.

Federal actions are called for. These include an improved home buyer tax credit to attract veteran customers to the worst market in housing history since the Great Depression.