Home Mortgage Applications Fall For Week

Applications for home mortgages fell last week for the first time in three weeks, impacted by a sharp drop in demand for both home purchase loans and refinancing, an industry group said.

The Mortgage Bankers Association said its seasonally adjusted index fell a significant 5.5 percent to 641.1 in the week ending August 17.

Mortgage applications, however, climbed earlier in August after a major home loan lender hurt by turmoil in mortgage bond and other financial markets closed its doors, forcing borrowers to fill out more applications elsewhere.

American Home Mortgage, the 10th biggest U.S. lender in the first half of 2007, announced on August 2 that it stopped making home loans.

“The drop in home loan applications we see here may be an indication that those borrowers have now been taken care of,” said Jay Brinkmann, a vice president of research at the MBA.

Creditors pulled support from the mortgage company, which specialized in making loans to borrowers with credit profiles better than subprime, but below what most lenders consider prime.

American Home Mortgage originated $35 billion in mortgages in the first six months of 2007, according to Inside Mortgage Finance, a trade publication.

The seasonally adjusted index of applications for mortgage refinancing dropped 6.4 percent last week as home loan rates crept higher.

The MBA’s purchase index, a gauge of mortgage loan requests for home purchases, slipped five percent to 441.5 as prices remain stagnant throughout a great many U.S. markets.

The four-week moving average for the mortgage application index, which helps ease out volatile week-to-week ratings, rose by 1.3 percent.

Fixed 30-year home loan rates - the industry benchmark - now average 6.49 percent, excluding fees, up from 6.45 percent the previous week.

SOURCE: Reuters