Mortgage Applications Fall

U.S. mortgage applications fell for a second consecutive week, led by a decline in home purchase loans, as interest rates hit their highest levels since early December, an industry trade group said Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity for the week ended Feb. 3 decreased 1.2 percent to 619.3 from the previous week's 626.8.

The MBA's seasonally adjusted purchase mortgage index fell 2.4 percent to 425.1 from the previous week's 435.7. The index is considered a timely gauge on U.S. home sales.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.25 percent, up 0.05 percentage point from the previous week's 6.20 percent, marking their second consecutive weekly increase. Rates were at their highest levels since the week ended Dec. 9, when they reached 6.28 percent.

The 30-year fixed-rate mortgage, the industry benchmark, is substantially above its 2005 low of 5.47 percent in late June of 2005, but below its 6.33 percent high in the week of Nov. 11.

Fixed 15-year mortgage rates averaged 5.84 percent, up from 5.79 percent the previous week. Rates on one-year adjustable-rate mortgages (ARMs) were unchanged at 5.48 percent.

Analysts say an increasing number of borrowers have been converting their ARMs into new fixed-rate loans as the difference between adjustable and fixed mortgage interest rates narrow. This has been a factor behind the recent rise in demand for refinancing.

The group's seasonally adjusted index of refinancing applications increased 0.2 percent to 1,751.0 compared to 1,747.2 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.