U.S. MBA Mortgage Applications Index Fell 1.8 Percent Last Week
Mortgage applications in the U.S. fell last week from the highest level in four months as borrowing costs increased.
The Mortgage Bankers Association’s index of applications to purchase a home or refinance a loan declined by 1.8 percent to 742.9 in the week ended Oct. 9 from 756.3 a week earlier. The group’s gauge of purchases dropped 5 percent and its measure of refinancing decreased 0.1 percent.
The index has jumped 52 percent over the last year as government efforts to bring down interest rates and on unclog credit have contributed to gains in sales. Economists are counting on stabilization in housing to help the economy recover from the worst recession since the 1930s.
“We’ve seen bottom overall in terms of residential construction and home sales,” Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida, said before the report. “It’s going to be a long road back though.”
The mortgage bankers’ purchase index decreased to 290.9 from 306.1 last week, the highest level since January, today’s report showed. The refinancing gauge fell to 3,374.6 from 3,377.1, the highest level since May.
The share of applicants seeking to refinance loans rose to 67.4 percent of all applications from 66.3 percent.
Rates Rise
Borrowing costs rose above 5 percent for the first time in a month. The average rate on a 30-year fixed- rate loan increased to 5.02 percent last week from 4.89 percent the prior week. The rate reached 4.61 percent at the end of March, the lowest level since the group’s records began in 1990.
At the current 30-year rate, monthly borrowing costs for each $100,000 of a loan would be $538, or about $92 less than the same week a year earlier, when the rate was 6.47 percent.
The average rate on a 15-year fixed mortgage increased to 4.44 percent last week from 4.32 percent. The rate on a one- year adjustable mortgage rose to 6.71 percent from 6.56 percent.
The mortgage industry remains “relatively fragile,” in part because it has been bolstered by government aid, Barbara Desoer, Bank of America Corp.’s home-loan unit head, said yesterday at a Mortgage Bankers Association conference. The U.S. hasn’t reached the peak in the number of people who can’t pay their mortgages, she said.
“Clearly there are some green shoots and early indicators” the mortgage and housing markets are recovering, Desoer said. Real improvement requires a “weaning” of the industry off U.S. support put in place to combat the financial crisis that began in 2007.
The Washington-based Mortgage Bankers Association’s loan survey, compiled every week, covers about half of all U.S. retail residential mortgage originations.
Filed under: money, technology by Finance Boss