Mortgage applications fall for a second week

Statistic reflects drop in home purchases and refinancing deals

July 03, 2005|By BLOOMBERG NEWS

WASHINGTON - Mortgage applications fell for a second week, reflecting fewer home purchases and less refinancing, a survey of lenders showed.

The Mortgage Bankers Association's index of mortgage applications declined 1.1 percent to 778.4 in the week that ended June 24. The index still is up 35 percent from the same week a year earlier.

The index of applications for loans to buy homes declined 0.4 percent to 477.4, the trade association said. In the week ended June 10, the measure was at a record 529.3. The gauge of applications to refinance existing mortgages decreased 1.8 percent last week to 2529.2.

The average 30-year fixed-rate mortgage fell to 5.47 percent during the week from 5.63 percent, the association said. It was 6.21 percent a year ago and a record low 4.99 percent in June 2003. With longer-term rates falling, fewer people are opting for adjustable rates.

The share of applications for adjustable-rate mortgages fell to 30 percent from 30.7 percent of total applications the previous week. That's the lowest share of total applications since April 2004.

The share of applications to refinance mortgages declined to 45.4 percent of total applications from 45.6 percent the previous week.

The National Association of Realtors forecasts new-home sales this year to rise to 1.24 million units from last year's record 1.203 million. Sales of previously owned homes might rise to 6.89 million from 6.78 million last year, the group said. It revised its forecasts this month after previous projections of small declines.

"We're ahead of where we thought we would be at this time when we projected numbers back in January," said Bob Moulton, president of Americana Mortgage Group. "We thought interest rates were going to be higher; interest rates are lower."

May sales of new homes and existing homes were the second-highest on record, government and industry data showed. New homes sales rose to a 1.298 million annual rate, while purchases of existing homes increased to a 7.13 million pace.

The mortgage bankers' survey covers about half of all retail residential mortgage originations and has been conducted weekly since 1990. The base period is March 16, 1990, when the value for all indexes was 100.

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