home loan demand falls despite lower rates
By Julie Haviv
NEW YORK, May 24 (Reuters) - U.S. mortgage applications fell last week, driven by a steep decline in home purchasing loans even as interest rates dropped, an industry trade group said on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity for the week ended May 19 decreased 6.0 percent to 552.6 from the previous week's 588.0.
The MBA's seasonally adjusted purchase mortgage index fell 7.1 percent to 396.4. The purchase index -- considered a timely gauge of U.S. home sales -- was also below its year-ago level of 482.3.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.61 percent, down 0.05 percentage point from the previous week, which was its highest level in nearly four years.
The group's seasonally adjusted index of refinancing applications decreased 4.3 percent to 1,480.5. A year earlier the index stood at 2,167.9.
The refinance share of mortgage activity increased to 35.7 percent of total applications from 35.0 percent the previous week.
Historically low mortgage rates have fueled a five-year housing boom, helping support the U.S. economy's recovery from recession despite uncertain business investment.
Analysts differ on whether or not there is a housing bubble, but most agree that the market is cooling off from its record run.
Fixed 15-year mortgage rates averaged 6.23 percent, down from 6.26 percent the previous week. Rates on one-year adjustable-rate mortgages (ARMs) decreased to 6.02 percent from 6.07 percent.
ARMs have been a refuge for cash-strapped consumers seeking to buy a home with low initial mortgage payments. Rates on ARMs, however, have been rising less than fixed-rate mortgages, which is possibly why demand for floating-rate products increased last week.
The ARM share of activity rose to 30.5 percent of total applications last week from 29.9 percent the previous week.
The MBA's survey covers about 50 percent of all U.S. retail residential mortgage originations. Respondents include mortgage bankers, commercial banks and thrifts.
NEW YORK, May 24 (Reuters) - U.S. mortgage applications fell last week, driven by a steep decline in home purchasing loans even as interest rates dropped, an industry trade group said on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity for the week ended May 19 decreased 6.0 percent to 552.6 from the previous week's 588.0.
The MBA's seasonally adjusted purchase mortgage index fell 7.1 percent to 396.4. The purchase index -- considered a timely gauge of U.S. home sales -- was also below its year-ago level of 482.3.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.61 percent, down 0.05 percentage point from the previous week, which was its highest level in nearly four years.
The group's seasonally adjusted index of refinancing applications decreased 4.3 percent to 1,480.5. A year earlier the index stood at 2,167.9.
The refinance share of mortgage activity increased to 35.7 percent of total applications from 35.0 percent the previous week.
Historically low mortgage rates have fueled a five-year housing boom, helping support the U.S. economy's recovery from recession despite uncertain business investment.
Analysts differ on whether or not there is a housing bubble, but most agree that the market is cooling off from its record run.
Fixed 15-year mortgage rates averaged 6.23 percent, down from 6.26 percent the previous week. Rates on one-year adjustable-rate mortgages (ARMs) decreased to 6.02 percent from 6.07 percent.
ARMs have been a refuge for cash-strapped consumers seeking to buy a home with low initial mortgage payments. Rates on ARMs, however, have been rising less than fixed-rate mortgages, which is possibly why demand for floating-rate products increased last week.
The ARM share of activity rose to 30.5 percent of total applications last week from 29.9 percent the previous week.
The MBA's survey covers about 50 percent of all U.S. retail residential mortgage originations. Respondents include mortgage bankers, commercial banks and thrifts.
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