U.S. MBA's Mortgage Applications Index Fell 12.5% Last Week
By Vince Golle
U.S. MBA's Mortgage Applications Index Fell 12.5% Last Week
Washington, Sept. 8 (Bloomberg) -- Applications for U.S.
mortgages fell last week to the lowest level in almost two years,
reflecting a rise in home-loan interest rates, the Mortgage
Bankers Association of America said.
The MBA's mortgage applications index decreased 12.5 percent
to 274.9 in the week ended Sept. 3 from 314 in the previous week.
The applications index was the lowest since a 274.5 reading for
the week ended Oct. 24, 1997.
The group's purchase index, which gauges demand for houses,
fell 12.2 percent to 254.1 from the previous week's 289.5. All
the indexes are seasonally adjusted.
``With rates still rising and the Fed appearing determined
to slow growth, the prospects for a near-term strengthening in
the market do not look good,' said Greg Jones, chief economist
at Briefing.com in Jackson, Wyoming, in a report.
Federal Reserve policy-makers boosted interest rates a half
point in two steps June 30 and Aug. 24 in an effort to keep
inflation under wraps.
The MBA's average contract rate on a 30-year fixed-rate
mortgage with a 20 percent down payment rose 6 basis points to
7.99 percent last week. Though that is 16 basis points lower than
a month ago, the 30-year fixed rate is 1.35 percentage points
higher than the same week a year ago.
The average rate on a one-year adjustable mortgage, pegged
to the one-year constant-maturity Treasury index, rose 8 basis
points last week to 6.88 percent, the MBA said.
Higher interest rates are also deterring home refinancing.
The MBA's refinancing index dropped 13.3 percent to 395.9 last
week from 456.4 the previous week.
Applications to refinance existing mortgages keep declining.
``Rising mortgage rates are rapidly causing the volume of
refinancing to dry up,' said Vassilis Lekkas, a senior economist
for Freddie Mac. ``With current rates for 30-year fixed-rate
mortgages hovering around 8 percent, most homeowners who were
going to refinance for a lower mortgage rate have already done
so.'
Even so, income growth, a confident consumer and
unemployment at a 29-year low will likely keep home sales firm
for the rest of the year. ``We also don't expect a significant
downturn in housing in the absence of either a sharp stock market
decline or a more substantial increase in interest rates,' Jones
said. ``The housing sector will shift from a positive to a
neutral factor for the overall economy, but no worse.'
New home sales rose in July to the second-highest level on
record, government figures showed last month. New single-family
home sales rose 0.1 percent in July to 980,000 units at a
seasonally adjusted annual rate, the Commerce Department said.
July's pace was exceeded only by November's record 985,000-unit
annual rate. Moreover, the Commerce Department revised up June's
sales pace to 979,000 units -- a 7.3 percent increase over May
and previously reported as an increase to a 929,000-unit pace.
Report Details
The MBA also reported that its overall mortgage applications
index fell 13.8 percent to 274.7 last week when it isn't adjusted
for seasonal variations. The unadjusted refinancing index dropped
13.3 percent to 395.9, and the unadjusted purchase index
decreased 13.9 percent to 253.9.
The MBA survey measures mortgage activity against a base
period with an index value of 100 set in the week ended March 16,
1990. The survey covers about 40 percent of the U.S. residential
mortgage market.
The MBA's adjusted indexes measure how many applications
U.S. mortgage bankers receive each week and account for seasonal
changes and holidays. |
