Mortgage Applications Index Fell 6.2pc week ending July 18 2008

July 23 2008 - Mortgage applications in the U.S. dropped 6.2 percent last week, led by declining demand for loans to purchase homes as interest rates jumped.

The Mortgage Bankers Association’s index of applications to buy a home or refinance a loan fell to 489.6 in the week ended July 18 from 522.2 the prior week. The group’s refinancing gauge declined 5.6 percent while the purchase index decreased 6.7 percent.

The average rate on a 30-year fixed mortgage reached the highest level in a year, threatening to deepen the U.S. housing recession and prolong the economic slowdown. Lenders are charging more for home loans after posting billions of dollars of losses resulting from the credit rout. That has sent rates higher even after the Federal Reserve lowered interest rates seven times.

“There’s certainly no sign of recovery at this point,” James O’Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut, said before the report.

The mortgage bankers’ applications index reached 461.3 a month ago, the lowest level in almost seven years.

The average rate on a 30-year fixed-rate loan jumped to 6.59 percent last week from 6.22 percent, today’s mortgage bankers report showed. The rate is the highest since the week ended July 20, 2007. At the current rate, monthly borrowing costs for each $100,000 would be $638, up $70 from the 2008 low in January.

http://www.mortgagebankers.org

U.S. Mortgage Applications Index Fell 6.2% Last Week
by Courtney Schlisserman | Bloomberg