NEW YORK – U.S. mortgage applications fell last week, reflecting a decline in home refinancing loans as interest rates climbed, 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 26 decreased 1.9 percent to 541.9 from the previous week's 552.6.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.66 percent, up 0.05 percentage point from the previous week, and matching a four-year high touched two weeks ago.
The MBA's seasonally adjusted purchase mortgage index fell 0.2 percent to 395.5.
The purchase index — considered a timely gauge of U.S. home sales — was also below its year-ago level of 462.7.
The group's seasonally adjusted index of refinancing applications decreased 4.8 percent to 1,409.0. A year earlier the index stood at 2,142.1.
The refinance share of mortgage activity decreased to 34.9 percent of total applications from 35.7 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 6.22 percent, down from 6.23 percent the previous week. Rates on one-year adjustable-rate mortgages (ARMs) increased to 6.09 percent from 6.02 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 rates, which is possibly why demand for floating-rate products increased last week.
The ARM share of activity edged up to 30.7 percent of total applications last week from 30.5 percent the previous week. It was the highest ARM share since late January.
The MBA's survey covers about 50 percent of all U.S. retail residential mortgage originations. Respondents include mortgage bankers, commercial banks and thrifts.