U.S. mortgage applications fell to a more than 3-1/2-year low last week amid a sharp drop in demand for loan refinancing even as interest rates held steady, an industry trade group said Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications for the week ended Dec. 23 decreased 6.8 percent to 554.1 from the previous week’s 594.6. Volume was at its lowest level since the week ended May 24, 2002, when the index hit 516.9.
The group’s seasonally adjusted index of refinancing applications dropped 11.2 percent to 1,259.1, compared with 1,418.1 the previous week. Volume was at its lowest level since the week ended April 12, 2002, when the index reached 1,246.1.
An adjustment was included in the data to help account for reduced application activity prior to the holiday weekend, the MBA said.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.21 percent, down 0.01 percentage point from the previous week’s 6.22 percent.
The 30-year fixed-rate mortgage, the industry benchmark, is substantially above its 2005 low of 5.47 percent in late June, but below its 6.33 percent high in the week of Nov. 11.
The MBA’s seasonally adjusted purchase mortgage index fell 4.5 percent to 432.9 from the previous week’s 453.1, its lowest level since February. The index is considered a timely gauge on U.S. home sales.
Fixed 15-year mortgage rates averaged 5.76 percent, unchanged from the previous week. Rates on one-year adjustable-rate mortgages fell to 5.36 percent from 5.41 percent.