Mortgage applications decrease

October 16, 2005|By BLOOMBERG NEWS

WASHINGTON -- Mortgage applications fell to the lowest level since April as higher interest rates slowed both refinancing and home purchases, according to a private group's survey.

The Mortgage Bankers Association's gauge of applications declined 2.6 percent to 694.8 in the week ended Oct. 7 from 713.5 the previous week. The last time the index was as low was April 15, when it was 672.6.

The average 30-year fixed mortgage increased to 5.98 percent in the week, the highest since the end of March and the fifth straight rise, according to the bankers group. Higher borrowing costs have caused purchase applications to decline for four consecutive weeks, suggesting home sales are starting to cool. The National Association of Realtors forecasts slower sales in 2006 after a record this year.

"Those are still interest rates that make housing affordable, and the mortgage market, while not as robust as a year ago, is still strong," said Bob Walters, chief economist at Quicken Loans Inc. in Livonia, Mich.

The group's purchase index fell to 469.5 from 473.8 the week before. While that level is the lowest since the end of May, it remains higher than the same time last year.

The Mortgage Bankers Association's refinancing index fell 4.6 percent to 2004.9 from 2107.4 a week earlier. The share of applications to refinance fell to 43.5 percent from 44.5 percent. Those for adjustable-rate mortgages dropped to 29.5 percent from 29.8 percent.

Quicken, the nation's largest online mortgage lender, is seeing more people refinance out of their adjustable rate mortgages to fixed-rate mortgages in anticipation of higher borrowing costs, Walters said.

The average rate on a 15-year mortgage held at 5.55 percent and that for a one-year adjustable rate mortgage rose to 5.26 percent, from 5.13 percent a week earlier.

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