NEW YORK – Applications for U.S. home mortgages fell last week due to a sharp decline in purchasing and refinancing activity as mortgage rates rose slightly, the Mortgage Bankers Association (search) said on Wednesday.
The declines erased much of the jump in mortgage activity from the preceding week when mortgages for home purchases reached a record peak.
The Mortgage Bankers Association, an industry group, said its seasonally adjusted index of mortgage application activity decreased 11.3 percent to 786.8 in the week ending June 17, erasing some of the previous week's 17.4 percent gain.
The MBA's seasonally adjusted index of refinancing applications (search) dropped 13.2 percent to 2575.0, after rising 25.6 percent the prior week.
The MBA's purchase index, a gauge of loan requests for home purchases, fell 9.4 percent to 479.4, after climbing 10.4 percent to a record high the previous week.
Despite last week's drop in mortgage applications, there has been little sign that demand has weakened significantly as mortgage rates remain low, having dropped from April levels.
Recent data on the U.S. housing sector showed that the market is still red hot, with home building and sales remaining at robust levels.
According to the MBA, fixed 30-year mortgage rates averaged 5.63 percent last week, excluding fees, up 1 basis point from 5.62 percent the previous week. Rates are lower than early April, when the fixed 30-year mortgage was at 5.91 percent.
Interest rates also are much lower than a year ago. The fixed 30-year mortgage rate (search) as of June 18, 2004 was 6.21 percent, according to MBA data.
Industry analysts and economists have said they expect home sales to edge off record 2004 levels as the Federal Reserveraises interest rates.
Further insight into the strength of the U.S. housing market will emerge this week via economic data on existing and new home sales slated for Thursday and Friday, respectively.
The MBA also said the average contract interest rate for 15-year fixed-rate mortgages rose last week, up 6 basis points to 5.24 percent from 5.18 percent a week earlier.
Rates on one-year adjustable-rate mortgages (search), or ARMs, rose to 4.46 percent from 4.38 percent the prior week.
Applications for ARMs fell to 30.7 percent of total applications from 30.9 percent the previous week, the MBA said.
Refinancings also decreased as a percentage of all mortgage applications, at 45.6 percent of total applications, from 46.4 percent the previous week.
The MBA's survey covers approximately 50 percent of all U.S. retail residential mortgage originations. It has been conducted weekly since 1990.
Respondents include mortgage bankers, commercial banks and thrifts.