Home Loan Applications Decline Another 2.5 Percent

Home mortgage applications fell for the fifth consecutive week, largely reflecting a drop in demand for home purchase loans, an industry trade group said Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase loan activity, dropped 2.5 percent for the week ending April 13.

The four-week moving average of mortgage applications, which smooths out the more volatile weekly figures, declined by 1.6 percent.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.22 percent, up 0.06 points from the previous week, its highest since early February.

At the same time, mortgage interest rates were still significantly below year-ago levels of 6.56 percent.

Weighing on the housing market is an unwieldy supply of homes for sale.

Also contributing to the cooling of the housing market is the meltdown in the bad credit mortgage market, which has driven lenders to hold hearings and to tighten underwriting standards.

The MBA’s seasonally adjusted purchase index, widely considered a timely gauge of U.S. home sales, fell 4.2 percent to 396.5, its first drop below the 400 threshold since the middle of February. The index was below its year-ago level of 407.4.

The group’s seasonally adjusted index of mortgage refinance applications decreased 0.3 percent to 2,008.4. A year earlier, the refinancing index stood at 1,526.1.

The mortgage refinancing share of the overall home loan applications increased to 43.6 percent from 42.8 percent the previous week.

Fixed 15-year mortgage rates averaged 5.92 percent, up from 5.91 percent. Rates on one-year adjustable-rate mortgage (ARM) products increased to 5.89 percent from 5.88 percent.

The ARM share of activity decreased to 18.1 percent from 18.7 percent the previous week.

U.S. housing industry indexes, in general, tend to be volatile and have recently painted a mixed picture, with some pointing to weakening and others to stabilization in the hard-hit sector.

The survey covers about 50 percent of all U.S. retail residential home loans. Respondents include mortgage banks, commercial banks and thrifts.

SOURCE: Reuters