Home loan demand falls even though mortgage rates were lower
Posted 11/22/2006 9:39 AM ET
By Julie Haviv, Reuters

NEW YORK — Mortgage applications fell for the first time in three weeks despite a dip in mortgage rates to their lowest level since January, an industry trade group said Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and purchasing loans, for the week ended Nov. 17 fell 3.7%.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.13%, down 0.02 percentage point from the previous week, and well below a four-year high 6.86% in June. Interest rates were also below year-ago levels of 6.26%.

The 30-year fixed-rate mortgage was at its lowest level since the week ended Jan. 20, when it reached 6.04%. The MBA's seasonally adjusted purchase index, widely considered a timely gauge of U.S. home sales, fell 2.8% to 401.4. The index was substantially below its year-ago level of 472.3. The group's seasonally adjusted index of refinancing applications fell 4.3% to 1,935.3. A year earlier the index stood at 1,584.1.

The refinance share of applications increased to 48.6% from 48% the previous week, remaining at its highest level since February 2005, the MBA said. Fixed 15-year mortgage rates averaged 5.88% the week ended Nov. 17, up from 5.85%. Rates on one-year adjustable-rate mortgages (ARMs) increased to 5.88% from 5.87%.

The ARM share of activity was unchanged at 25.5% of total applications. The MBA's survey covers about half of retail residential loans. Respondents include mortgage banks, commercial banks and thrifts.

Copyright 2006 Reuters Limited.