home loan demand falls with increasing mortgage rates
By Julie Haviv
NEW YORK, May 10 (Reuters) - U.S. mortgage applications fell last week, led by a steep decline in home refinancing loans as interest rates hit their highest this year, 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 5 decreased 5.8 percent to 562.1 from the previous week's 596.8.
The MBA's seasonally adjusted purchase mortgage index fell 3.9 percent to 416.5.
The purchase index -- considered a timely gauge of U.S. home sales -- was also substantially below its year-ago level of 526.2.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.61 percent, up 0.04 percentage point from the previous week, its highest level since June 2002 when it reached 6.65 percent.
The group's seasonally adjusted index of refinancing applications decreased 8.8 percent to 1,427.4, its lowest level this year. A year earlier the index stood at 2,263.3.
The refinance share of mortgage activity decreased to 33.8 percent of total applications from 35.2 percent the previous week, which was its lowest share of activity since June 2004.
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 6.20 percent, up from 6.19 percent the previous week. Rates on one-year adjustable-rate mortgages (ARMs) decreased to 6.04 percent from 6.08 percent.
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 10 (Reuters) - U.S. mortgage applications fell last week, led by a steep decline in home refinancing loans as interest rates hit their highest this year, 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 5 decreased 5.8 percent to 562.1 from the previous week's 596.8.
The MBA's seasonally adjusted purchase mortgage index fell 3.9 percent to 416.5.
The purchase index -- considered a timely gauge of U.S. home sales -- was also substantially below its year-ago level of 526.2.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.61 percent, up 0.04 percentage point from the previous week, its highest level since June 2002 when it reached 6.65 percent.
The group's seasonally adjusted index of refinancing applications decreased 8.8 percent to 1,427.4, its lowest level this year. A year earlier the index stood at 2,263.3.
The refinance share of mortgage activity decreased to 33.8 percent of total applications from 35.2 percent the previous week, which was its lowest share of activity since June 2004.
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 6.20 percent, up from 6.19 percent the previous week. Rates on one-year adjustable-rate mortgages (ARMs) decreased to 6.04 percent from 6.08 percent.
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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