Mortgage applications fall to lowest level since end of May

July 31, 2005|By BLOOMBERG NEWS

WASHINGTON - An index of mortgage applications fell to the lowest level since the end of May, reflecting less refinancing and a third straight decline in home purchases, a private group's survey found.

The Mortgage Bankers Association's index declined 5.8 percent to 754.3 in the week that ended July 22, from 801.1 in the week ending July 15. The group's refinancing gauge dropped 11.4 percent.

Thirty-year mortgage rates that have drifted higher this month may keep sales from increasing, economists said. Applications to buy homes fell 0.7 percent in the week.

The purchase index, at 485.1, is still higher than the average for the year, suggesting sales may stay close to a record pace.

The mortgage group's index of purchase applications fell from 488.7 and is above the year's average of 466. The measure reached a record 529.3 in the week that ended June 10.

The group's refinancing index dropped to 2,320.3 from 2,618.2.

"A slowdown is going to be dependent upon interest rates," said Doug Duncan, chief economist at the Mortgage Bankers Association.

"Most of us have forecast modestly rising interest rates, so if that occurs, we would expect some depressurization of the market, as opposed to a drop," he said.

The share of applications for adjustable-rate mortgages rose to 29.4 percent of total applications, from 28.5 percent a week earlier.

Applications for refinancing fell to 42.9 percent, from 45.7 percent.

"As interest rates go up, that's going to help cool the housing market," Glenn Haberbush, an economist at Mizuho Securities USA Inc. in Hoboken, N.J.

"Demand is there as long as interest rates stay where they are."

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