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Mortgage applications decline for fourth week

U.S. mortgage applications fell for a fourth straight week as a robust rebound in loan refinancings failed to lift activity from more than a 3-1/2-year low, an industry trade group said Wednesday.
/ Source: Reuters

U.S. mortgage applications fell for a fourth straight week as a robust rebound in loan refinancings failed to lift activity from more than a 3-1/2-year low, an industry trade group said Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity for the week ended Dec. 30 decreased 1.5 percent to 545.9 from the previous week’s 554.1. Volume was at its lowest level since the week ended May 24, 2002, when the index reached 516.9.

The group’s seasonally adjusted index of refinancing applications increased 8.3 percent to 1,363.2 compared with 1,259.1 the previous week. The index rose for the first time in four weeks.

Volume, however, was at its lowest level since the week ended June 4, 2004, when the index reached the same point.

A steady fall in interest rates on fixed-rate loans have led borrowers to refinance out of their existing adjustable-rate mortgages into fixed-rate loans last week.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.15 percent, down 0.06 percentage point from the previous week’s 6.21 percent.

The 30-year fixed-rate mortgage, the industry benchmark, is substantially above its 2005 low of 5.47 percent in late June, but remains below its 6.33 percent high reached in the week of Nov. 11.

The MBA’s seasonally adjusted purchase mortgage index fell 3.4 percent to 418.3 from the previous week’s 432.9, its lowest level of activity since February. The index is considered a timely gauge on U.S. home sales.

An adjustment was included in the data to help account for the reduced application activity during the holiday week, the MBA said.

Fixed 15-year mortgage rates averaged 5.74 percent, down from 5.76 percent the previous week. Rates on one-year adjustable-rate mortgages (ARMs) increased to 5.41 percent from 5.36 percent.

The MBA’s survey covers about 50 percent of all U.S. retail residential mortgage originations. Respondents include mortgage bankers, commercial banks and thrifts.