Mortgage Applications Fall week ending Feb 22 2008

WASHINGTON - February 27, 2008 - Home-loan data to be released Wednesday will show whether mortgage applications declined for the third-straight week as interest rates rose.

The Mortgage Bankers Association is scheduled to report its index of home-loan application volume for the week ended Feb. 22 at 7 a.m. EST.

The seasonally adjusted index fell 22.6 percent last week to 822.9 as potential borrowers backed away from taking out new loans or refinancing their existing ones. Refinancing applications fell 27.9 percent, while purchase applications fell 11.5 percent.

David Resler, chief economist at Nomura Securities, said in a research report that the declines reflected a “swift reaction” to a jump in mortgage rates.

Freddie Mac, the mortgage company, said last Thursday that 30-year fixed-rate mortgages rose to an average of 6.04 percent up from 5.72 percent a year earlier. Earlier this month, mortgage applications surged to levels not seen since March 2004, with rates falling below 6 percent and staying there for six straight weeks, according to Freddie Mac’s survey.

The mortgage bankers’ index, which stood at 100 at its onset in March 1990, is derived from a survey of major lenders representing about half of the U.S. mortgages made each week. It does not include loans made by non-bank lenders.

The index has fluctuated over the past 18 months after sinking in June 2006 to 529.6, its lowest level since 2002. It peaked at 1,856.7 in May 2003 at the height of the housing boom.

The mortgage industry’s woes, which started with rising defaults among borrowers with weak credit and spread to better-quality loans, have shuttered dozens of lenders and led to multi-billion dollar losses.