Mortgage requests decrease

Small drop in applications reflects fewer homes sold

October 31, 2004|By BLOOMBERG NEWS

An index of U.S. mortgage applications fell last week, reflecting fewer home purchases, a private group's survey found.

The Mortgage Bankers Association's applications index dropped 0.8 percentage point to 703.9 from the previous week's 709.9. The group's gauge of purchase applications declined 4.4 percent to 440.9 from 461.4.

The decline in the purchase index, which reached a high of 501.6 in January suggests that home sales will be hard-pressed to accelerate.

Falling mortgage rates helped push September sales of previously owned homes to the third-highest on record and led to a rebound in refinancing since June, a source of cash for some homeowners.

"We're already at record levels on home sales, so it's hard to see that we can get much of an acceleration in housing activity in 2005 compared to this year," said Steven Wood, president of Insight Economics in Danville, Calif. At the same time, "as long as rates are down then consumers in general are going to be very aggressive buyers of homes," Wood said.

The Mortgage Bankers Association's refinancing index rose 3.6 percent to 2,233.8 from 2,155.2.

New-home sales rose 3.5 percent in September to a 1.206 million annual rate, the third-fastest on record, the Commerce Department reported Wednesday. Home purchases increased in every region but the West and were fueled by 30-year mortgage rates that have been below 6 percent since the end of July.

Sales of new homes this year will reach 1.164 million, surpassing last year's record 1.089 million, according to the latest forecast by the National Association of Home Builders.

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