Mortgage applications decline as refinancing eases (AP)

Wednesday, February 25th, 2009 | Finance News

WASHINGTON – Mortgage applications fell last week, as refinancing activity slowed.

The Mortgage Bankers Association said Wednesday its weekly application index fell 15.1 percent for the week ended Feb. 20. The index came in at 743.5, down from 875.3 a week earlier.

The latest results included an adjustment to account for a shortened week due to the President's Day holiday. On an unadjusted basis, the index slipped 22.6 percent compared with the previous week, the trade group said.

About 69.7 percent of applications came from borrowers seeking to refinance home loans at lower rates, rather than purchase homes. The refinance rate was down from 74.2 percent in the prior week, the MBA said.

Refinance volume decreased 19.1 percent while purchase volume dipped 2.6 percent.

The trade group's application index remains below its peak of 1,856.7, reached in May 2003 at the height of the housing boom. The survey provides a snapshot of mortgage lending activity involving mortgage bankers, commercial banks and thrifts. It covers about half of all new residential mortgage loans made each week.

An index value of 100 is equal to the application volume on March 16, 1990, the first week the MBA tracked application volume.

Interest rates have plunged since the Federal Reserve said in November it would buy up to $500 billion in mortgage-backed securities in an effort to bolster the long-suffering housing market.

The average rate for traditional, 30-year fixed-rate mortgages rose to 5.07 percent from 4.99 percent a week earlier, according to the MBA report.

The average rate for 15-year fixed-rate mortgages rose to 4.71 percent from 4.66 percent a week earlier, while the average rate for one-year adjustable-rate mortgages rose to 6.13 percent from 6.10 percent.