Home loan requests fall again

October 09, 2005|By BLOOMBERG NEWS

WASHINGTON -- Mortgage applications fell for the second consecutive week as higher borrowing costs made homes less affordable, a private report showed.

The Mortgage Bankers Association's applications index fell 1.1 percent to 713.5 in the week that ended Sept. 30 from 721.2 the previous week. Applications to purchase homes declined 1.9 percent to 473.8, while filings for loans to refinance mortgages held near their lowest level in four months.

Mortgage rates rose, with the 30-year fixed rate increasing to 5.94 percent from 5.85 percent the previous week. Borrowing costs are being pushed higher by inflationary pressures, which are raising yields on the 10-year Treasury notes that many mortgage rates are pegged against. Still, costs remain within a percentage point of the all-time low of 4.99 percent for the 30-year fixed rate, which was established in June 2003. At the current 30-year fixed mortgage rate, borrowing costs for each $100,000 of a loan would be $595.70 a month. That compares with a low of $536.21 in June 2003.

The mortgage association's index for loans to refinance mortgages rose 0.1 percent to 2,107.4 in the week, compared with 2,106.6 the previous week and 2,270.8 a year ago.

Douglas Duncan, chief economist of the Mortgage Bankers Association, expects mortgage rates to remain low enough to keep housing sales on pace for a fifth consecutive record this year. He estimates home sales will increase to a record 8.22 million this year from 7.99 million in 2004, before slowing to 7.9 million in 2006.

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