Answer: I'm so sorry about your tree. Based on your description I am not sure if this hole was caused by a borer of some kind, or possibly damage to the bark allowing rot and pests to enter it, or if there is a graft failure, or just quite what. In any case, it is never a good sign to find a hole like that, or any gap in the bark for that matter. Unfortunately, damage such as this can sometimes cause problems of internal weakness that can cause the tree to fail to thrive or to die or to suddenly fail in say a windstorm. I would suggest you consult with a professionally trained and certified arborist as to whether or not the tree can be saved and will be worth keeping in the long run. I wish I could be more encouraging.
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