Mortgage applications decline 1.6%, bankers' survey finds

April 24, 2005|By BLOOMBERG NEWS

WASHINGTON - Mortgage applications declined in the second week of April as fewer people bought homes or refinanced existing loans, a private survey showed.

The Mortgage Bankers Association's index of mortgage applications dropped 1.6 percent to 672.6 in the week that ended April 15 from 683.6. The group's purchase index fell 1.6 percent to 466.7 from 474.5.

Higher home prices this year and mortgage rates that are expected to rise as Federal Reserve policy-makers boost their benchmark rate will make housing more expensive for buyers, economists said. The National Association of Realtors and Freddie Mac, the No. 1 buyer of mortgages, forecast slower sales this year after a record 2004.

"The purchase market is firm, but it just seems the houses are staying on the market a little bit longer than they were this time last year," said Bob Moulton, president of Americana Mortgage Group Inc. in Manhasset, N.Y. Still, "I'm seeing sellers staying firm on their prices."

New home construction fell 17.6 percent in March, the biggest drop since January 1991. While economists expect rising interest rates to crimp home buying this year, the decline in starts for last month was "an exaggeration," said Ken Mayland of ClearView Economics in Pepper Pike, Ohio. "In spite of the plunge of starts, the number of homes under construction ... held up very well, an indication that there is plenty of construction dollars continuing to flow into the economy," Mayland wrote in a note to clients.

The mortgage bankers group's gauge of applications to refinance existing mortgages also fell 1.6 percent, to 1870 from 1899.6 the week before.

The profile of people refinancing has changed over the past year, from homeowners wanting to reduce their mortgages to those who need money to make home repairs, pay for college tuition or use the funds in other ways, Moulton said.

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