Mortgage applications fall as rising rates slow demand

November 06, 2005|By BLOOMBERG NEWS

WASHINGTON -- Mortgage applications fell in the week ended Oct. 28 to the lowest level since April, as higher mortgage rates pushed down demand for homes and slowed refinancing.

The Mortgage Bankers Association's index of applications declined 4.8 percent to 646.7, the fifth decrease in six weeks, from 679.1. The group's measure of home-purchase applications dropped to the lowest level since February.

The average rate on a 30-year fixed mortgage jumped to 6.21 percent, the highest since June of last year. Purchase applications have fallen in six of seven weeks, suggesting housing will provide less of a boost to the economy in coming months, economists said.

"New purchase and refinancing activity are crumbling," said Steven Wood, chief economist at Insight Economics in Danville, Calif. "While housing activity remains relatively high and continues to contribute to economic growth, that contribution will quickly fade as mortgage rates continue to rise."

The index of both purchases and refinancing was the lowest since 644.5 in the week ended April 1.

The purchase index fell 6.2 percent to 437.6, from 466.4 a week earlier. The refinancing gauge decreased 2.8 percent to 1862.8 from 1916.8.

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